Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 06, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Merchants Bancorp | |
Entity Central Index Key | 0001629019 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,704,163 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and due from banks | $ 19,554 | $ 25,855 |
Interest-earning demand accounts | 293,897 | 310,669 |
Cash and cash equivalents | 313,451 | 336,524 |
Securities purchased under agreements to resell | 6,838 | 6,875 |
Trading securities | 129,914 | 163,419 |
Available for sale securities | 296,669 | 331,071 |
Federal Home Loan Bank (FHLB) stock | 18,880 | 7,974 |
Loans held for sale (includes $6,307 and $11,886, respectively at fair value) | 882,071 | 832,455 |
Loans receivable, net of allowance for loan losses of $13,356 and $12,704, respectively | 2,168,256 | 2,045,423 |
Premises and equipment, net | 21,078 | 15,136 |
Mortgage servicing rights | 76,249 | 77,844 |
Interest receivable | 14,365 | 13,827 |
Goodwill | 17,144 | 17,477 |
Intangible assets, net | 3,381 | 3,542 |
Other assets and receivables | 28,429 | 32,596 |
Total assets | 3,976,725 | 3,884,163 |
Deposits | ||
Noninterest-bearing | 128,029 | 182,879 |
Interest-bearing | 2,992,998 | 3,048,207 |
Total deposits | 3,121,027 | 3,231,086 |
Borrowings | 338,031 | 195,453 |
Deferred and current tax liabilities, net | 18,274 | 15,444 |
Other liabilities | 21,562 | 20,943 |
Total liabilities | 3,498,894 | 3,462,926 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock, without par value Authorized - 50,000,000 shares Issued and outstanding - 28,704,163 shares at March 31, 2019 and 28,694,036 shares at December 31, 2018 | 135,190 | 135,057 |
Retained earnings | 252,637 | 244,909 |
Accumulated other comprehensive income (loss) | 154 | (310) |
Total shareholders' equity | 477,831 | 421,237 |
Total liabilities and shareholders' equity | 3,976,725 | 3,884,163 |
8% Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | 41,581 | 41,581 |
Total shareholders' equity | 41,581 | $ 41,581 |
7% Preferred Stock | Series A preferred stock | ||
Shareholders' Equity | ||
Preferred stock | 48,269 | |
Total shareholders' equity | $ 48,269 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Loans held for sale at fair value | $ 6,307 | $ 11,886 |
Allowance for loans losses | $ 13,356 | $ 12,704 |
Stockholders' Equity: | ||
Common stock, without par value (in dollars per share) | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 28,704,163 | 28,694,036 |
Common stock, shares outstanding | 28,704,163 | 28,694,036 |
Preferred stock, without par value (in dollars per share) | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
8% Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 8.00% | 8.00% |
Preferred stock liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 50,000 | 50,000 |
Preferred stock, shares issued | 41,625 | 41,625 |
Preferred stock, shares outstanding | 41,625 | 41,625 |
7% Preferred Stock | Series A preferred stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 7.00% | 7.00% |
Preferred stock liquidation preference (in dollars per share) | $ 25 | $ 25 |
Preferred stock, shares authorized | 3,500,000 | 3,500,000 |
Preferred stock, shares issued | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 2,000,000 | 2,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest Income | ||
Loans | $ 34,455,000 | $ 24,612,000 |
Investment securities: | ||
Trading | 1,045,000 | 989,000 |
Available for sale - taxable | 1,551,000 | 1,542,000 |
Available for sale - tax exempt | 96,000 | |
Federal Home Loan Bank stock | 223,000 | 129,000 |
Other | 2,304,000 | 1,766,000 |
Total interest income | 39,674,000 | 29,038,000 |
Interest Expense | ||
Deposits | 14,227,000 | 7,016,000 |
Borrowed funds | 1,316,000 | 1,914,000 |
Total interest expense | 15,543,000 | 8,930,000 |
Net interest income | 24,131,000 | 20,108,000 |
Provision for loan losses | 649,000 | 1,406,000 |
Net Interest Income After Provision for Loan Losses | 23,482,000 | 18,702,000 |
Noninterest Income | ||
Gain on sale of loans | 2,643,000 | 10,892,000 |
Loan servicing fees, net | (347,000) | (322,000) |
Mortgage warehouse fees | 753,000 | 486,000 |
Gains on sale of investments available for sale (includes $127 and $0, respectively, related to accumulated other comprehensive earnings reclassifications) | 127,000 | |
Other income | 488,000 | 257,000 |
Total noninterest income | 3,664,000 | 11,313,000 |
Noninterest Expense | ||
Salaries and employee benefits | 8,567,000 | 6,487,000 |
Loan expenses | 934,000 | 956,000 |
Occupancy and equipment | 876,000 | 565,000 |
Professional fees | 539,000 | 488,000 |
Deposit insurance expense | 277,000 | 246,000 |
Technology expense | 472,000 | 291,000 |
Other expense | 1,370,000 | 1,237,000 |
Total noninterest expense | 13,035,000 | 10,270,000 |
Income Before Income Taxes | 14,111,000 | 19,745,000 |
Provision for income taxes (includes $32 and $0, respectively, related to income tax expense for reclassification items) | 3,541,000 | 4,684,000 |
Net Income | 10,570,000 | 15,061,000 |
Dividends on preferred stock | (833,000) | (833,000) |
Net Income Allocated to Common Shareholders | $ 9,737,000 | $ 14,228,000 |
Basic Earnings Per Share (in dollar per share) | $ 0.34 | $ 0.50 |
Diluted Earnings Per Share (in dollar per share) | $ 0.34 | $ 0.50 |
Weighted-Average Shares Outstanding Basic (in Shares) | 28,702,250 | 28,690,876 |
Weighted-Average Shares Outstanding Diluted (in Shares) | 28,737,439 | 28,710,480 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Income | ||
Reclassifications included in gain on sale of investments | $ 127 | $ 0 |
Provision for income taxes related to income tax expense for reclassification items | $ 32 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Comprehensive Income | ||
Net Income | $ 10,570 | $ 15,061 |
Other Comprehensive Income (Loss): | ||
Net change in unrealized losses on investment securities available for sale, net of (taxes) benefits of $(192), $97 respectively | 559 | (318) |
Less: Reclassification adjustment for gains included in net income, net of $32 tax expense in 2019 | 95 | |
Other comprehensive income (loss) for the period | 464 | (318) |
Comprehensive Income | $ 11,034 | $ 14,743 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Comprehensive Income | ||
Net change in unrealized losses on investment securities available for sale, net of (taxes) benefits | $ (192) | $ 97 |
Reclassification adjustment for gains included in net income, tax expense | $ 32 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Shareholders’ Equity - USD ($) $ in Thousands | Common Stock | 8% Preferred Stock | 7% Preferred StockSeries A preferred stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at beginning of the period at Dec. 31, 2017 | $ 134,891 | $ 41,581 | $ 192,008 | $ (1,006) | $ 367,474 | |
Balance at beginning of the period (in shares) at Dec. 31, 2017 | 28,685,167 | 41,625 | ||||
Condensed Consolidated Statements of Shareholders’ Equity | ||||||
Net income | 15,061 | 15,061 | ||||
Shares issued for stock compensation plans | $ 50 | 50 | ||||
Shares issued for stock compensation plans (in shares) | 7,039 | |||||
Dividends on 8% preferred stock, $5.00 per share | (833) | (833) | ||||
Dividends on common stock, $0.07 and $0.06 per share for the three month ended 2019 and 2018 respectively | (1,721) | (1,721) | ||||
Reclassification of deferred tax asset due to tax reform | 243 | (243) | ||||
Other comprehensive income (loss) | (318) | (318) | ||||
Balance at end of the period at Mar. 31, 2018 | $ 134,941 | $ 41,581 | 204,758 | (1,567) | 379,713 | |
Balance at end of the period (in shares) at Mar. 31, 2018 | 28,692,206 | 41,625 | ||||
Balance at beginning of the period at Dec. 31, 2018 | $ 135,057 | $ 41,581 | 244,909 | (310) | 421,237 | |
Balance at beginning of the period (in shares) at Dec. 31, 2018 | 28,694,036 | 41,625 | ||||
Condensed Consolidated Statements of Shareholders’ Equity | ||||||
Net income | 10,570 | 10,570 | ||||
Shares issued for stock compensation plans | $ 133 | 133 | ||||
Shares issued for stock compensation plans (in shares) | 10,127 | |||||
Issuance of 7% preferred stock, net of offering expenses of $1,731 | $ 48,269 | 48,269 | ||||
Issuance of 7% preferred stock, net of offering expenses of $1,731 (in shares) | 2,000,000 | |||||
Dividends on 8% preferred stock, $5.00 per share | (833) | (833) | ||||
Dividends on common stock, $0.07 and $0.06 per share for the three month ended 2019 and 2018 respectively | (2,009) | (2,009) | ||||
Other comprehensive income (loss) | 464 | 464 | ||||
Balance at end of the period at Mar. 31, 2019 | $ 135,190 | $ 41,581 | $ 48,269 | $ 252,637 | $ 154 | $ 477,831 |
Balance at end of the period (in shares) at Mar. 31, 2019 | 28,704,163 | 41,625 | 2,000,000 |
Condensed Consolidated Statem_6
Condensed Consolidated Statement of Shareholders’ Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Dividends on common stock per share | $ 0.07 | $ 0.06 |
7% Preferred Stock | ||
Offering expenses on issuance of stock | $ 1,731 | |
8% Preferred Stock | ||
Dividends on preferred stock per share | $ 5 | $ 5 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities: | ||
Net income | $ 10,570 | $ 15,061 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 137 | 103 |
Provision for loan losses | 649 | 1,406 |
Gain on sale of securities | (127) | |
Gain on sale of loans | (2,643) | (10,892) |
Proceeds from sales of loans | 3,729,430 | 4,020,784 |
Loans and participations originated and purchased for sale | (3,776,827) | (4,098,115) |
Change in mortgage servicing rights for paydowns and fair value adjustments | 2,615 | 2,263 |
Net change in: | ||
Trading securities | 33,505 | (59,193) |
Other assets and receivables | 2,699 | (3,407) |
Other liabilities | 1,933 | 7,918 |
Other | 798 | 309 |
Net cash provided by (used in) operating activities | 2,739 | (123,763) |
Investing activities: | ||
Net change in securities purchased under agreements to resell | 37 | 41 |
Purchases of available-for-sale securities | (45,000) | (28,224) |
Proceeds from the sale of available-for-sale securities | 31,086 | |
Proceeds from calls, maturities and paydowns of available-for-sale securities | 49,055 | 25,360 |
Purchases of loans | (14,233) | (34,273) |
Net change in loans receivable | (109,620) | (137,092) |
Purchase of Federal Home Loan Bank stock | (11,860) | (118) |
Proceeds from sale of Federal Home Loan Bank stock | 1,190 | |
Purchases of premises and equipment | (4,206) | (1,055) |
Purchases of mortgage servicing rights | (327) | |
Purchase of limited partnership interests | (13) | |
Cash (paid) received in acquisition of subsidiary | 6,505 | |
Net cash used in investing activities | (103,551) | (169,196) |
Financing activities: | ||
Net change in deposits | (110,031) | 82,106 |
Proceeds from Federal Home Loan Bank borrowings | 2,348,720 | 284,189 |
Repayment of Federal Home Loan Bank borrowings | (2,209,281) | (142,568) |
Proceeds from issuance of preferred stock | 48,269 | |
Proceeds from notes payable | 4,404 | |
Payments on notes payable | (1,500) | |
Dividends | (2,842) | (2,554) |
Net cash provided by financing activities | 77,739 | 221,173 |
Net Change in Cash and Cash Equivalents | (23,073) | (71,786) |
Cash and Cash Equivalents, Beginning of Period | 336,524 | 359,519 |
Cash and Cash Equivalents, End of Period | 313,451 | 287,733 |
Additional Cash Flows Information: | ||
Interest paid | 14,745 | 7,751 |
Income taxes paid | $ 64 | |
The Company purchased all of the capital stock of FMBI on January 2, 2018. In conjunction with the acquisitions, liabilities were assumed as follows: | ||
Fair value of assets acquired | 44,217 | |
Cash paid for the capital stock/fair value common stock issued | 5,472 | |
Fair value of liabilities assumed | $ 38,745 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Basis of Presentation | Note 1: Basis of Presentation The accompanying consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries, Merchants Bank of Indiana (“Merchants Bank”) and Farmers-Merchants Bank of Illinois (“FMBI”). Merchants Bank’s direct and indirect subsidiaries include Merchants Capital Corp. (“MCC”), Merchants Capital Servicing, LLC (“MCS”), Ash Realty Holdings, LLC (“Ash Realty”), MBI Midtown West, LLC (“MMW”), Natty Mac Funding, Inc. (“NMF”), and OneTrust Funding, Inc. The Company also acquired Farmers-Merchants National Bank of Paxton (‘FMNBP”) on October 1, 2018 through a merger with FMBI, with FMBI as the surviving entity. All these entities are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2018, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of March 31, 2019 and for the three months ended March 31, 2019 and 2018, were prepared in accordance with the instructions for Form 10‑Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2018 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of March 31, 2019 and the results of operations for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018. All interim amounts have not been audited and the results of operations for the three months ended March 31, 2019, herein are not necessarily indicative of the results of operations to be expected for the entire year. Principles of Consolidation The consolidated financial statements as of and for the period ended March 31, 2019 include the Company, and its wholly owned subsidiaries, Merchants Bank, and FMBI. Also included are Merchants Bank’s wholly owned subsidiaries, MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, MMW, and OneTrust Funding, Inc. The consolidated financial statements as of and for the period ended March 31, 2018, include the Company and its wholly owned subsidiary, Merchants Bank, and Merchants Bank’s wholly owned subsidiaries, FMBI (after being acquired on January 2, 2018 and excluding results from FMNBP, which was acquired on October 1, 2018), MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, and MMW. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, loan servicing rights and fair values of financial instruments. Public Offering of Preferred Stock On March 28, 2019 the Company issued 2,000,000 shares of 7 .00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock, without par value (the “Series A Preferred Stock”), with a liquidation preference of $25.00 per share . The aggregate gross offering proceeds for the shares issued by the Company was $50.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $1.7 million paid to third parties, the Company received total net proceeds of $48.3 million. On April 12, 2019, the Company issued an additional 81,800 shares of Series A Preferred Stock to the underwriters related to their exercise of an option to purchase additional shares under the associated underwriting agreement, resulting in an addition $2.0 million in net proceeds, after deducting $41,000 underwriting discounts. The Series A Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series A Preferred Stock, to the extent declared by the Company’s board, are payable quarterly. Recent Acquisitions On May 8, 2017, the Company entered into a Stock Purchase Agreement to acquire FMBI (formerly Joy State Bank). The acquisition closed on January 2, 2018 at a total cost of approximately $5.5 million. At December 31, 2017 Joy State Bank had $43 million in assets. T he Company recorded goodwill and intangible assets totaling $988,000 and $478,000, respectively, in connection with the acquisition. The intangible assets consisted of core deposit intangibles that are being amortized over 10 years on an accelerated basis. The acquired time deposits of $16.7 million were recorded at a fair value of $16.9 million. The fair value premium of $185,000 is being accreted against interest expense over 20 months. The acquired loan portfolio of $27.9 million was recorded at a fair value of $27.5 million. The fair value discount of $458,000 is being accreted to interest income on a straight-line basis over an average of 39 months in accordance with ASC 310-20. While there were some loans identified for potential classification under ASC 310-30, they were not material to the transaction. On October 22, 2018, the Company changed the name of Joy State Bank to Farmers-Merchants Bank of Illinois (“FMBI”). As a result of the acquisition, the Company increased its deposit base and benefited from economies of scale. The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. On October 1, 2018, the Company acquired FM Bancorp, Inc., a bank holding company, and its wholly owned subsidiary, Farmers-Merchants National Bank of Paxton (“FMNBP”). On that date, FM Bancorp, Inc. ultimately merged with and into the Company, with the Company as the surviving entity, and FMNBP merged with and into Joy State Bank, with Joy State Bank as the surviving bank. Effective October 22, 2018, Joy State Bank’s name changed to Farmers-Merchants Bank of Illinois (“FMBI”). Under the terms of the merger agreement, shareholders of the 27,537 outstanding shares of FM Bancorp, Inc. were compensated $795.29 per share, for a total purchase price of $21.9 million. As of September 30, 2018, FM Bancorp, Inc. and Farmers-Merchants National Bank of Paxton had total assets of approximately $110.0 million, available for sale securities of $66.3 million, deposits of approximately $95.7 million, and net loan receivables of approximately $35.0 million. As of March 31, 2019, the Company recorded goodwill and intangible assets totaling $6.9 million and $1.9 million. The intangible assets consisted of core deposit intangibles that are being amortized over 10 years on an accelerated basis. The acquired available for sale securities of $66.3 million were recorded at fair value. A fair value discount associated with securities of $1.0 million is being accreted into interest income, in accordance with ASC 310-20. While there were some loans identified for potential classification under ASC 310-30, they were not material to the transaction. The acquired gross loan portfolio of $35.4 million was recorded at a fair value of $34.8 million. The fair value discount of $625,000 includes a discount related to interest assumptions for $279,000 and to credit assumptions for $346,000. The portion related to interest assumptions is being accreted into interest income on a straight-line basis over an average of 72 months in accordance with ASC 310-20. The discount portion related to credit assumptions is being accreted into interest income over the life of the loan. The acquired deposits of $95.7 million were recorded at a fair value of $95.7 million. As a result of the acquisition, the Company increased its deposit base and benefited from economies of scale. The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. On December 31, 2018, the Company acquired the assets of NattyMac, LLC, a warehouse lender operating out of Clearwater, Florida, from Home Point Financial Corporation (“Home Point”). The Company also fully repaid Home Point the balance of, and all interest owed on, the $30 million subordinated debt it had previously invested in the Company. Goodwill totaling $5.0 million was recorded by the Company. Certain fair value measurements, intangibles, and the purchase price allocation are still being evaluated by management and are subject to change during the measurement period. As a result of the acquisition, the Company expects to increase its geographic footprint in the warehouse business, reduce its costs of borrowing, increase the earnings generated from its warehouse business, and benefit from its experienced talent pool. The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. Given the impact of the acquisitions was immaterial to the Company and its results of operations, pro forma information has not been included. Reclassifications Certain reclassifications have been made to the 2018 financial statements to conform to the financial statement presentation as of and for the three months ended March 31, 2019. These reclassifications had no effect net income. |
Securities
Securities | 3 Months Ended |
Mar. 31, 2019 | |
Securities | |
Securities | Note 2: Securities Trading Securities Securities that are held principally for resale in the near term are recorded as trading securities at fair value with changes in fair value recorded in earnings. Trading securities include FHA and conventional Fannie Mae and Freddie Mac participation certificates. The unrealized gains included in trading securities totaled $545,000 and $1.5 million at March 31, 2019 and 2018, respectively. Securities Available-For-Sale The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows: March 31, 2019 Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 10,740 $ 8 $ 5 $ 10,743 Federal agencies 235,621 2 423 235,200 Municipals 12,050 430 — 12,480 Mortgage-backed - Government-sponsored entity (GSE) - residential 38,092 155 1 38,246 Total available-for-sale securities $ 296,503 $ 595 $ 429 $ 296,669 December 31, 2018 Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 11,928 $ 26 $ 13 $ 11,941 Federal agencies 237,894 8 972 236,930 Municipals 21,014 336 18 21,332 Mortgage-backed - Government-sponsored entity (GSE) - residential 60,693 254 79 60,868 Total available-for-sale securities $ 331,529 $ 624 $ 1,082 $ 331,071 The amortized cost and fair value of available-for-sale securities at March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. March 31, 2019 December 31, 2018 Amortized Fair Amortized Fair Cost Value Cost Value Contractual Maturity (In thousands) Within one year $ 149,649 $ 149,318 $ 179,323 $ 178,581 After one through five years 98,685 98,643 72,470 72,282 After five through ten years 2,120 2,210 7,087 7,203 After ten years 7,957 8,252 11,956 12,137 258,411 258,423 270,836 270,203 Mortgage-backed - Government-sponsored entity (GSE) - residential 38,092 38,246 60,693 60,868 $ 296,503 $ 296,669 $ 331,529 $ 331,071 During the three months ended March 31, 2019, $31.1 million of securities available-for-sale were sold, and a net gain of $127,000 was recognized, consisting of $361,000 in gains and $234,000 of losses. During the three months ended March 31, 2018, no securities available-for-sale were sold. The following tables show the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2019 and December 31, 2018: March 31, 2019 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available-for-sale securities: Treasury notes $ — $ — $ 2,243 $ 5 $ 2,243 $ 5 Federal agencies — — 180,198 423 180,198 423 Municipals — — — — — — Mortgage-backed - Government-sponsored entity (GSE) - residential 914 1 — — 914 1 $ 914 $ 1 $ 182,441 $ 428 $ 183,355 $ 429 December 31, 2018 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available-for-sale securities: Treasury notes $ 1,990 $ 8 $ 995 $ 5 $ 2,985 $ 13 Federal agencies 28,296 97 191,280 875 219,576 $ 972 Municipals 2,051 18 — — 2,051 $ 18 Mortgage-backed - Government-sponsored entity (GSE) - residential 15,543 79 — — 15,543 79 $ 47,880 $ 202 $ 192,275 $ 880 $ 240,155 $ 1,082 Other-than-temporary Impairment Unrealized losses on securities have not been recognized to income because the Company has the intent and ability to hold the securities for the foreseeable future, and the decline in fair value is primarily due to increased market interest rates. The fair value is expected to recover as the bonds approach the maturity date. |
Loans and Allowance for Loan Lo
Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2019 | |
Loans and Allowance for Loan Losses | |
Loans and Allowance for Loan Losses | Note 3: Loans and Allowance for Loan Losses Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. For loans amortized at cost, interest income is accrued based on the unpaid principal balance. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past-due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is applied to the principal balance until the loan can be returned to an accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For all loan portfolio segments, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectable based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms. Interest earned from the time of funding to the time of sale is recognized as interest income as accrued. Fees earned agreements are recognized when collected as noninterest income. Loans receivable at March 31, 2019 and December 31, 2018 include: March 31, December 31, 2019 2018 (In thousands) Mortgage warehouse lines of credit $ 412,171 $ 337,332 Residential real estate 409,172 410,871 Multi-family and healthcare financing 965,363 914,393 Commercial and commercial real estate 296,483 299,194 Agricultural production and real estate 81,063 79,255 Consumer and margin loans 17,360 17,082 2,181,612 2,058,127 Less Allowance for loan losses 13,356 12,704 Loans Receivable $ 2,168,256 $ 2,045,423 Risk characteristics applicable to each segment of the loan portfolio are described as follows. Mortgage Warehouse Lines of Credit (MTG WHLOC): Under its warehouse program, the Company provides warehouse financing arrangements to approved mortgage companies for the origination and sale of residential mortgage loans and to a lesser extent multi-family loans. Agency eligible, governmental and jumbo residential mortgage loans that are secured by mortgages placed on existing one to four family dwellings may be originated or purchased and placed on each mortgage warehouse line. As a secured line of credit, collateral pledged to the Company secures each individual mortgage until the lender sells the loan in the secondary market. A traditional secured warehouse line of credit typically carries a base interest rate of 30-day LIBOR, plus a margin, or mortgage note rate, less a margin. Risk is evident if there is a change in the fair value of mortgage loans originated by mortgage bankers in warehouse, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit. Residential Real Estate Loans (RES RE): Real estate loans are secured by owner-occupied 1‑4 family residences. Repayment of residential real estate loans is primarily dependent on the personal income and credit rating of the borrowers. All-in-One mortgages included in this segment typically carry a base rate of 30-day LIBOR, plus a margin. Multi-Family and Healthcare Financing (MF RE): The Company engages in multi-family and healthcare financing, including construction loans, specializing in originating and servicing loans for multi-family rental and senior living properties. In addition, the Company originates loans secured by an assignment of federal income tax credits by partnerships invested in multi-family real estate projects. Construction and land loans are generally based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent agency-eligible financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economy in the Company’s market area. Repayment of these loans depends on the successful operation of a business or property and the borrower’s cash flows. Commercial Lending and Commercial Real Estate Loans (CML & CRE): The commercial lending and commercial real estate portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions, as well as loans to commercial customers to finance land and improvements. It also includes loans collateralized by mortgage servicing rights of mortgage warehouse customers. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. Agricultural Production and Real Estate Loans (AG & AGRE): Agricultural production loans are generally comprised of seasonal operating lines of credit to grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. The Company also offers long term financing to purchase agricultural real estate. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry-developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary. The Company is approved to sell agricultural loans in the secondary market through the Federal Agricultural Mortgage Corporation and uses this relationship to manage interest rate risk within the portfolio. Consumer and Margin Loans (CON & MAR): Consumer loans are those loans secured by household assets. Margin loans are those loans secured by marketable securities. The term and maximum amount for these loans are determined by considering the purpose of the loan, the margin (advance percentage against value) in all collateral, the primary source of repayment, and the borrower’s other related cash flow. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to net interest income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense. Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In restructuring the loan, the Company attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. A troubled debt restructuring (TDR) occurs when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status, and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. Nonaccrual loans, including TDRs that have not met the six-month minimum performance criterion, are reported as non-performing loans. For all loan classes, it is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until three months of satisfactory borrower performance, at which time management would consider its return to accrual status. A loan is generally classified as nonaccrual when the Company believes that receipt of principal and interest is questionable under the terms of the loan agreement. Most generally, this is at 90 or more days past due. With regard to determination of the amount of the allowance for credit losses, restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously above. The following tables present, by portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2019 and 2018 and the recorded investment in loans and impairment method as of March 31, 2019: At or For the Three Months Ended March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 1,068 $ 1,986 $ 6,030 $ 3,051 $ 429 $ 140 $ 12,704 Provision (credit) for loan losses 186 4 347 71 34 7 649 Loans charged to the allowance — — — — — — — Recoveries of loans previously charged off — — — — 3 — 3 Balance, end of period $ 1,254 $ 1,990 $ 6,377 $ 3,122 $ 466 $ 147 $ 13,356 Ending balance: individually evaluated for impairment $ 225 $ — $ — $ 500 $ 20 $ — $ 745 Ending balance: collectively evaluated for impairment $ 1,029 $ 1,990 $ 6,377 $ 2,622 $ 446 $ 147 $ 12,611 Loans Ending balance $ 412,171 $ 409,172 $ 965,363 $ 296,483 $ 81,063 $ 17,360 $ 2,181,612 Ending balance individually evaluated for impairment $ 572 $ 4,255 $ — $ 8,186 $ 347 $ 50 $ 13,410 Ending balance collectively evaluated for impairment $ 411,599 $ 404,917 $ 965,363 $ 288,297 $ 80,716 $ 17,310 $ 2,168,202 For the Three Months Ended March 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 283 $ 1,587 $ 3,502 $ 2,362 $ 320 $ 257 $ 8,311 Provision (credit) for loan losses 223 76 748 323 13 23 1,406 Loans charged to the allowance — — — — — (17) (17) Recoveries of loans previously charged off — 1 — — — 4 5 Balance, end of period $ 506 $ 1,664 $ 4,250 $ 2,685 $ 333 $ 267 $ 9,705 The following table presents the allowance for loan losses and the recorded investment in loans and impairment method as of December 31, 2018: December 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, December 31, 2018 $ 1,068 $ 1,986 $ 6,030 $ 3,051 $ 429 $ 140 $ 12,704 Ending balance: individually evaluated for impairment $ 225 $ — $ — $ 400 $ 20 $ — $ 645 Ending balance: collectively evaluated for impairment $ 843 $ 1,986 $ 6,030 $ 2,651 $ 409 $ 140 $ 12,059 Loans Balance, December 31, 2018 $ 337,332 $ 410,871 $ 914,393 $ 299,194 $ 79,255 $ 17,082 $ 2,058,127 Ending balance individually evaluated for impairment $ 575 $ 1,606 $ — $ 8,576 $ 370 $ 58 $ 11,185 Ending balance collectively evaluated for impairment $ 336,757 $ 409,265 $ 914,393 $ 290,618 $ 78,885 $ 17,024 $ 2,046,942 Internal Risk Categories In adherence with policy, the Company uses the following internal risk grading categories and definitions for loans: Average or above – Loans to borrowers of satisfactory financial strength or better. Earnings performance is consistent with primary and secondary sources of repayment that are well defined and adequate to retire the debt in a timely and orderly fashion. These businesses would generally exhibit satisfactory asset quality and liquidity with moderate leverage, average performance to their peer group and experienced management in key positions. These loans are disclosed as “Acceptable and Above” in the following table. Acceptable – Loans to borrowers involving more than average risk and which contain certain characteristics that require some supervision and attention by the lender. Asset quality is acceptable, but debt capacity is modest and little excess liquidity is available. The borrower may be fully leveraged and unable to sustain major setbacks. Covenants are structured to ensure adequate protection. Borrower’s management may have limited experience and depth. This category includes loans which are highly leveraged due to regulatory constraints, as well as loans involving reasonable exceptions to policy. These loans are disclosed as “Acceptable and Above” in the following table. Special Mention (Watch) – This is a loan that is sound and collectable but contains considerable risk. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The following tables present the credit risk profile of the Company’s loan portfolio based on internal rating category and payment activity as of March 31, 2019 and December 31, 2018: March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 590 $ 56,962 $ 12,451 $ 2,791 $ 381 $ 73,175 Substandard 572 4,255 — 8,186 347 50 13,410 Doubtful — — — — — — — Acceptable and Above 411,599 404,327 908,401 275,846 77,925 16,929 2,095,027 Total $ 412,171 $ 409,172 $ 965,363 $ 296,483 $ 81,063 $ 17,360 $ 2,181,612 December 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 443 $ 71,734 $ 14,650 $ 3,096 $ 681 $ 90,604 Substandard 575 1,606 — 8,576 370 58 11,185 Doubtful — — — — — — — Acceptable and Above 336,757 408,822 842,659 275,968 75,789 16,343 1,956,338 Total $ 337,332 $ 410,871 $ 914,393 $ 299,194 $ 79,255 $ 17,082 $ 2,058,127 The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis. No significant changes were made to either during the past year. The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of March 31, 2019 and December 31, 2018: March 31, 2019 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ 324 $ 324 $ 411,847 $ 412,171 RES RE 3,431 237 998 4,666 404,506 409,172 MF RE — — — — 965,363 965,363 CML & CRE 191 306 175 672 295,811 296,483 AG & AGRE 53 — 577 630 80,433 81,063 CON & MAR 13 — 21 34 17,326 17,360 $ 3,688 $ 543 $ 2,095 $ 6,326 $ 2,175,286 $ 2,181,612 December 31, 2018 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ 324 $ 324 $ 337,008 $ 337,332 RES RE 579 178 825 1,582 409,289 410,871 MF RE — — — — 914,393 914,393 CML & CRE 245 52 253 550 298,644 299,194 AG & AGRE 91 — 588 679 78,576 79,255 CON & MAR 2 52 28 82 17,000 17,082 $ 917 $ 282 $ 2,018 $ 3,217 $ 2,054,910 $ 2,058,127 A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings. The following tables present impaired loans and specific valuation allowance information based on class level as of March 31, 2019 and December 31, 2018: March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 248 $ 4,255 $ — $ 5,907 $ 88 $ 50 $ 10,548 Unpaid principal balance 248 4,255 — 5,907 88 50 10,548 Impaired loans with a specific allowance: Recorded investment 324 — — 2,279 259 — 2,862 Unpaid principal balance 324 — — 2,279 259 — 2,862 Specific allowance 225 — — 500 20 — 745 Total impaired loans: Recorded investment 572 4,255 — 8,186 347 50 13,410 Unpaid principal balance 572 4,255 — 8,186 347 50 13,410 Specific allowance 225 — — 500 20 — 745 December 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 251 $ 1,606 $ — $ 5,636 $ 88 $ 58 $ 7,639 Unpaid principal balance 251 1,606 — 5,636 88 58 7,639 Impaired loans with a specific allowance: Recorded investment 324 — — 2,940 282 — 3,546 Unpaid principal balance 324 — — 2,940 282 — 3,546 Specific allowance 225 — — 400 20 — 645 Total impaired loans: Recorded investment 575 1,606 — 8,576 370 58 11,185 Unpaid principal balance 575 1,606 — 8,576 370 58 11,185 Specific allowance 225 — — 400 20 — 645 The following tables present by portfolio class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2019 and 2018: MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Three months ended March 31, 2019: Average recorded investment in impaired loans $ 574 $ 2,806 $ — $ 8,468 $ 364 $ 48 $ 12,260 Interest income recognized — 15 — 140 — — 155 Three months ended March 31, 2018: Average recorded investment in impaired loans $ 1,352 $ 729 $ 117 $ 6,587 $ 635 $ 146 $ 9,566 Interest income recognized 19 3 3 46 — — 71 The following table presents the Company’s nonaccrual loans and loans past due 90 days or more and still accruing at March 31, 2019 and December 31, 2018. March 31, December 31, 2019 2018 Total Loans > Total Loans > 90 Days & 90 Days & Nonaccrual Accruing Nonaccrual Accruing (In thousands) MTG WHLOC $ 572 $ — $ 575 $ — RES RE 702 454 893 74 MF RE — — — — CML & CRE 228 — 136 117 AG & AGRE 259 317 282 307 CON & MAR 13 8 18 9 $ 1,774 $ 779 $ 1,904 $ 507 No troubled loans were restructured during the three months ended March 31, 2019 or 2018. No restructured loans defaulted during the three months ended March 31, 2019 or 2018. There were no residential loans in process of foreclosure at March 31, 2019 or December 31, 2018. |
Regulatory Matters
Regulatory Matters | 3 Months Ended |
Mar. 31, 2019 | |
Regulatory Matters | |
Regulatory Matters | Note 4: Regulatory Matters The Company, Merchants Bank, and FMBI are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by federal and state banking regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company, Merchants Bank, and FMBI must meet specific capital guidelines that involve quantitative measures of the Company’s, Merchants Bank, and FMBI’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s, Merchants Bank’s, and FMBI’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company’s, Merchants Bank’s, and FMBI’s regulators could require adjustments to regulatory capital not reflected in these financial statements. Quantitative measures established by regulation to ensure capital adequacy require the Company, Merchants Bank, and FMBI to maintain minimum amounts and ratios (set forth in the table below). Management believes, as of March 31, 2019 and December 31, 2018, that the Company, Merchants Bank, and FMBI met all capital adequacy requirements to which they were subject. As of March 31, 2019 and December 31, 2018, the most recent notifications from the Board of Governors of the Federal Reserve System (“Federal Reserve”) categorized the Company as well capitalized and most recent notifications from the Federal Deposit Insurance Corporation (“FDIC”) categorized Merchants Bank and FMBI as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, a company must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Company, Merchants Bank, or FMBI’s category. The Company, Merchants Bank, and FMBI’s actual capital amounts and ratios are also presented in the following tables. Minimum Amount Required for Minimum Amount Adequately To Be Well Actual Capitalized (1) Capitalized (1) Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) March 31, 2019 Total capital (1) (to risk-weighted assets) Company $ 453,361 13.3 % $ 272,136 8.0 % $ — N/A Merchants Bank 478,574 14.6 % 262,223 8.0 % 327,778 10.0 % FMBI 19,384 15.7 % 9,876 8.0 % 12,345 10.0 % Tier 1 capital (1) (to risk-weighted assets) Company 440,007 12.9 % 204,102 6.0 % — N/A Merchants Bank 465,636 14.2 % 196,667 6.0 % 262,223 8.0 % FMBI 18,966 15.4 % 7,407 6.0 % 9,876 8.0 % Common Equity Tier 1 capital (1) (to risk-weighted assets) Company 350,157 10.3 % 153,077 4.5 % — N/A Merchants Bank 465,636 14.2 % 147,500 4.5 % 213,056 6.5 % FMBI 18,966 15.4 % 5,555 4.5 % 8,025 6.5 % Tier 1 capital (1) (to average assets) Company 440,007 12.0 % 146,417 4.0 % — N/A Merchants Bank 465,636 13.3 % 140,344 4.0 % 175,430 5.0 % FMBI 18,966 11.9 % 6,384 4.0 % 7,980 5.0 % Minimum Minimum Amount Required Amount To Be for Adequately Well Actual Capitalized (1) Capitalized (1) Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2018 Total capital (1) (to risk-weighted assets) Company $ 393,654 12.3 % $ 255,884 8.0 % $ — N/A Merchants Bank 412,386 13.3 % 248,290 8.0 % 310,363 10.0 % FMBI 17,537 18.6 % 7,559 8.0 % 9,448 10.0 % Tier 1 capital (1) (to risk-weighted assets) Company 380,950 11.9 % 191,913 6.0 % — N/A Merchants Bank 399,815 12.9 % 186,218 6.0 % 248,290 8.0 % FMBI 17,404 18.4 % 5,669 6.0 % 7,559 8.0 % Common Equity Tier 1 capital (1) (to risk-weighted assets) Company 339,369 10.6 % 143,935 4.5 % — N/A Merchants Bank 399,815 12.9 % 139,663 4.5 % 201,736 6.5 % FMBI 17,404 18.4 % 4,252 4.5 % 6,141 6.5 % Tier 1 capital (1) (to average assets) Company 380,950 10.0 % 152,081 4.0 % — N/A Merchants Bank 399,815 11.0 % 145,723 4.0 % 182,154 5.0 % FMBI 17,404 10.8 % 6,453 4.0 % 8,066 5.0 % 1 As defined by regulatory agencies. Beginning January 1, 2015, a new Basel III Capital Rule applied to Merchants Bank. The following table lists the capital categories and ratios determined by the Board of Governors of the Federal Reserve System and the FDIC. Common Equity Total Risk-based Tier 1 Risk-based Tier 1 Risk-based Tier 1 Capital Category Capital ratio Capital ratio Capital ratio Leverage ratio Well capitalized 10 % 8 % 6.5 % 5 % Adequately capitalized 8 6 4.5 4 Undercapitalized <8 <6 <4.5 <4 Significantly undercapitalized <6 <4 <3 <3 Critically undercapitalized Tangible Equity/Total Assets </= 2% The Basel III Capital Rules, among other things, (i) introduced a new capital measure called “Common Equity Tier 1” (CET1), (ii) specified that Tier 1 capital consist of CET1 and “Additional Tier 1 Capital” instruments meeting specified requirements, (iii) defined CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expanded the scope of the deductions/adjustments as compared to existing regulations. Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and are being phased in over a four-year period (beginning on January 1, 2015, and an additional 20% per year thereafter.) Under the new Basel III Capital Rules, in order to avoid limitations on capital distributions of dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of capital above its minimum risk-based capital requirements. The implementation of the capital conservation buffer began on January 1, 2016, at the 0.625% level and was phased in over a four‑year period (increasing by that amount on each subsequent January 1 until it reached 2.5% on January 1, 2019). |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | Note 5: Derivative Financial Instruments The Company uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Company enters into forward contracts for the future delivery of mortgage loans to third party investors and enters into interest rate locks with potential borrowers to fund specific mortgage loans that will be sold into the secondary market. The forward contracts are entered into in order to economically hedge the effect of changes in interest rates resulting from the Company’s commitment to fund the loans. Each of these items are considered derivatives, but are not designated as accounting hedges, and are recorded at fair value with changes in fair value reflected in noninterest income on the condensed consolidated statements of income. The fair value of derivative instruments with a positive fair value are reported in other assets in the condensed consolidated balance sheets while derivative instruments with a negative fair value are reported in other liabilities in the condensed consolidated balance sheets. The following table presents the notional amount and fair value of interest rate locks and forward contracts utilized by the Company at March 31, 2019 and December 31, 2018. Notional Fair Value Amount Balance Sheet Location Asset (Liability) March 31, 2019 (In thousands) (In thousands) Interest rate lock commitments $ 9,706 Derivative assets/liabilities $ 71 $ 1 Forward contracts 15,260 Derivative assets/liabilities — 18 $ 71 $ 19 Notional Fair Value Amount Balance Sheet Location Asset (Liability) December 31, 2018 (In thousands) (In thousands) Interest rate lock commitments $ 8,812 Derivative assets/liabilities $ 70 $ — Forward contracts 19,640 Derivative assets/liabilities — 9 $ 70 $ 9 Fair values of derivative financial instruments were estimated using changes in mortgage interest rates from the date the Company entered into the interest rate lock commitment and the balance sheet date. The following table summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income for the three months ended March 31, 2019 and 2018. Three Months Ended March 31, 2019 2018 (In thousands) Interest rate lock commitments $ — $ 114 Forward contracts (1) (5) 105 Net derivative gains (losses) $ (5) $ 219 _____________________________________ (1) Amount includes pair-off settlements. |
Disclosures about Fair Value of
Disclosures about Fair Value of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Disclosures about Fair Value of Assets and Liabilities | |
Disclosures about Fair Value of Assets and Liabilities | Note 6: Disclosures about Fair Value of Assets and Liabilities Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities Recurring Measurements The following tables present the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and December 31, 2018: Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) March 31, 2019 Trading securities $ 129,914 $ — $ 129,914 $ — Available-for-sale securities: Treasury notes 10,743 10,743 — — Federal agencies 235,200 — 235,200 — Municipals 12,480 — 12,480 — Mortgage-backed - Government-sponsored entity (GSE) - residential 38,246 — 38,246 — Loans held for sale 6,307 — 6,307 — Mortgage servicing rights 76,249 — — 76,249 Derivative assets - interest rate lock commitments 71 — — 71 Derivative liabilities - interest rate lock commitments 1 — — 1 Derivative liabilities - forward contracts 18 — 18 — December 31, 2018 Trading securities $ 163,419 $ — $ 163,419 $ — Available-for-sale securities: Treasury notes 11,941 11,941 — — Federal agencies 236,930 — 236,930 — Municipals 21,332 — 21,332 — Mortgage-backed - Government-sponsored entity (GSE) - residential 60,868 — 60,868 — Loans held for sale 11,886 — 11,886 — Mortgage servicing rights 77,844 — — 77,844 Derivative assets - interest rate lock commitments 70 — — 70 Derivative liabilities - forward contracts 9 — 9 — Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the three months ended March 31, 2019 and the year ended December 31, 2018. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Trading and Available-for-Sale Securities Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy including federal agencies, mortgage-backed securities, U.S. Treasuries, Equities, and Federal Housing Administration participation certificates. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Loans Held for Sale Certain loans held for sale at fair value are saleable into the secondary mortgage markets and their fair values are estimated using observable quoted market or contracted prices, or market price equivalents, which would be used by other market participants. These saleable loans are considered Level 2. Mortgage Servicing Rights Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models having significant inputs of discount rate, prepayment speed and default rate. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy. The Chief Financial Officer’s (CFO) office contracts with a pricing specialist to generate fair value estimates on a quarterly basis. The CFO’s office challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value complies with accounting standards generally accepted in the United States. Derivative Financial Instruments The Company estimates the fair value of interest rate lock commitments based on the value of the underlying mortgage loan, quoted mortgage backed security prices, estimates of the fair value of the mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the interest rate lock commitment, net of expenses. The Company estimates the fair value of forward sales commitments based on market quotes of mortgage backed security prices for securities similar to the ones used, which are considered Level 2. With respect to its interest rate lock commitments, management determined that a Level 3 classification was most appropriate based on the various significant unobservable inputs utilized in estimating the fair value of its interest rate lock commitments. Changes in fair value of the Company’s derivative financial instruments are recognized through noninterest income on its condensed consolidated statement of income. Level 3 Reconciliation The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable (Level 3) inputs: Three Months Ended March 31, 2019 2018 (In thousands) Mortgage servicing rights Balance, beginning of period $ 77,844 $ 66,079 Additions Originated and purchased servicing 1,020 3,452 Subtractions Paydowns (1,110) (1,370) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model (1,505) (893) Balance, end of period $ 76,249 $ 67,268 Available-for-sale securities - Municipals Balance, beginning of period $ — $ 6,688 Additions Purchased securities — — Subtractions Paydowns — (258) Sales — — Unrealized gains (losses) included in other comprehensive income — — Balance, end of period $ — $ 6,430 Derivative Assets - interest rate lock commitments Balance, beginning of period $ 70 $ — Purchases — — Changes in fair value 1 116 Balance, end of period $ 71 $ 116 Derivative Liabilities - interest rate lock commitments Balance, beginning of period $ — $ — Purchases — — Changes in fair value 1 2 Balance, end of period $ 1 $ 2 Nonrecurring Measurements The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and December 31, 2018. Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) March 31, 2019 Impaired loans (collateral-dependent) $ 1,600 $ — $ — $ 1,600 December 31, 2018 Impaired loans (collateral-dependent) $ 2,639 $ — $ — $ 2,639 Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheet, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Collateral-Dependent Impaired Loans, Net of Allowance for Loan Losses The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy. The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Company’s Chief Credit Officer’s (CCO) office. Appraisals are reviewed for accuracy and consistency by the CCO’s office. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the CCO’s office by comparison to historical results. Unobservable (Level 3) Inputs: The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill. Valuation Fair Value Technique Unobservable Inputs Range (In thousands) At March 31, 2019: Collateral-dependent impaired loans $ 1,600 Market comparable properties Marketability discount 32% Mortgage servicing rights $ 76,249 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 1% - 30% Derivative assets - interest rate lock commitments $ 71 Discounted cash flow loan closing rates 63-99% Derivative liabilities - interest rate lock commitments $ 1 Discounted cash flow loan closing rates 63-99% At December 31, 2018: Collateral-dependent impaired loans $ 2,639 Market comparable properties Marketability discount 17%-59% Mortgage servicing rights $ 77,844 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 1% - 30% Derivative assets - interest rate lock commitments $ 70 Discounted cash flow loan closing rates 95-100% Sensitivity of Significant Unobservable Inputs The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and of how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement. Mortgage Servicing Rights The significant unobservable inputs used in the fair value measurement of the Company’s mortgage servicing rights are discount rates and constant prepayment rates. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. Fair Value of Financial Instruments The following table presents the carrying amount and estimated fair values of the Company’s financial instruments not carried at fair value and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and December 31, 2018. Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Carrying Fair Assets Inputs Inputs Assets Value Value (Level 1) (Level 2) (Level 3) (In thousands) March 31, 2019 Financial assets: Cash and cash equivalents $ 313,451 $ 313,451 $ 313,451 $ — $ — Securities purchased under agreements to resell 6,838 6,838 — 6,838 — FHLB stock 18,880 18,880 — 18,880 — Loans held for sale 875,764 875,764 — 875,764 — Loans, net 2,168,256 2,170,521 — — 2,170,521 Interest receivable 14,365 14,365 — 14,365 — Financial liabilities: Deposits 3,121,027 3,120,546 2,438,323 682,223 — Lines of credit 31,605 31,605 — 31,605 — Short-term subordinated debt 13,486 13,486 — 13,486 — FHLB advances 292,940 292,823 — 292,823 — Interest payable 4,930 4,930 — 4,930 — December 31, 2018 Financial assets: Cash and cash equivalents $ 336,524 $ 336,524 $ 336,524 $ — $ — Securities purchased under agreements to resell 6,875 6,875 — 6,875 — FHLB stock 7,974 7,974 — 7,974 — Loans held for sale 820,569 820,569 — 820,569 — Loans, net 2,045,423 2,041,772 — — 2,041,772 Interest receivable 13,827 13,827 — 13,827 — Financial liabilities: Deposits 3,231,086 3,230,397 2,550,632 679,765 — Lines of credit 33,150 33,150 — 33,150 — Short-term subordinated debt 10,582 10,582 — 10,582 — FHLB advances 151,721 151,723 — 151,723 — Interest payable 4,132 4,132 — 4,132 — The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying balance sheets at amounts other than fair value. Cash and Cash Equivalents and Securities Purchased Under Agreement to Resell The carrying amount approximates fair value. Federal Home Loan Bank Stock The fair value of Federal Home Loan Bank of Indianapolis and Federal Home Loan Bank of Chicago (“FHLB”) stock is based on the price at which it may be sold to the FHLB. Loans Held For Sale The carrying amount approximates fair value due to the insignificant time between origination and date of sale. Loans Fair value is estimated by discounting the future cash flows using the market rates at which similar notes would be made to borrowers with similar credit ratings and for the same remaining maturities. The market rates used are based on current rates the Company would impose for similar loans and reflect a market participant assumption about risks associated with nonperformance, illiquidity, and the structure and term of the loans along with local economic and market conditions. Interest Receivable and Payable The carrying amount approximates fair value. The carrying amount is determined using the interest rate, balance and last payment date. Deposits The fair values of noninterest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date. Fair values for fixed-rate certificates and time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of expected monthly maturities on such time deposits. Line of Credit and Short-term Subordinated Debt The carrying amount approximates fair value. Federal Home Loan Bank Advances Fair value is estimated by discounting the future cash flows using rates of similar advances with similar maturities. These rates were obtained from current rates offered by the FHLB. Off-Balance Sheet Commitments Commitments include commitments to purchase and originate mortgage loans, commitments to sell mortgage loans and standby letters of credit and are generally of a short-term nature. The fair value of such commitments are based on fees currently charged to similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments to extend credit and letters of credit is not presented in the previous table since the fair value is considered to be insignificant. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per share | |
Earnings Per share | Note 7: Earnings Per Share Earnings per share were computed as follows: Three Month Periods Ended March 31, 2019 2018 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 10,570 $ 15,061 Dividends on preferred stock (833) (833) Net income allocated to common shareholders $ 9,737 $ 14,228 Basic earnings per share 28,702,250 $ 0.34 28,690,876 $ 0.50 Effect of dilutive securities-restricted stock awards 35,189 19,604 Diluted earnings per share 28,737,439 $ 0.34 28,710,480 $ 0.50 |
Share-Based Payment Plans
Share-Based Payment Plans | 3 Months Ended |
Mar. 31, 2019 | |
Share-Based Payment Plans | |
Share-Based Payment Plans | Note 8: Share-Based Payment Plans Equity-based incentive awards are currently made though our 2017 Equity Incentive Plan (the “2017 Incentive Plan”). Prior to the adoption of the 2017 Incentive Plan, the equity awards we issued historically consisted of restricted stock awards issued pursuant to the Incentive Plan for Merchants Bank of Indiana Executive Officers (the “Prior Incentive Plan”). As of the effective date of the 2017 Equity Incentive Plan, no further awards will be granted under the Prior Incentive Plan. However, any previously outstanding incentive award granted under the Prior Incentive Plan remains subject to the terms of such plans until the time it is no longer outstanding. During the three months ended March 31, 2019 and March 31, 2018, the Company issued 10,127 and 7,039 shares, respectively, pursuant to the Prior Incentive Plan. As of March 31, 2019, the Company has not issued any shares pursuant to the 2017 Equity Incentive Plan. During 2018, the Compensation Committee of the Board of Directors approved a plan for non-executive directors to receive a portion of their annual retainer fees in the form of common stock equal to $10,000, rounded up to the nearest whole share. No shares were issued to directors during the three months ended March 31, 2019 or March 31, 2018. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Information | |
Segment Information | Note 9: Segment Information Our business segments are defined as Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The reportable business segments are consistent with the internal reporting and evaluation of the principal lines of business of the Company. The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities. The Mortgage Warehousing segment funds agency eligible residential loans from origination or purchase to sale in the secondary market, as well as commercial loans to non-depository financial institutions. The Banking segment provides a wide range of financial products and services to consumers and businesses, including retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and Small Business Administration (“SBA”) lending. Other includes general and administrative expenses that provide services to all segments; internal funds transfer pricing offsets resulting from allocations to/from the other segments; certain elimination entries and investments in qualified affordable housing limited partnerships. All operations are domestic. The tables below present selected business segment financial information for the three months ended March 31, 2019 and 2018. Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2019 Total interest income $ 331 $ 14,380 $ 24,492 $ 471 $ 39,674 Total interest expense — 7,529 8,982 (968) 15,543 Net interest income 331 6,851 15,510 1,439 24,131 Provision for loan losses — 133 516 — 649 Net interest income after provision for loan losses 331 6,718 14,994 1,439 23,482 Total noninterest income 2,691 753 883 (663) 3,664 Total noninterest expense 3,977 2,336 4,120 2,602 13,035 Income before income taxes (955) 5,135 11,757 (1,826) 14,111 Income taxes (243) 1,303 2,988 (507) 3,541 Net income (loss) $ (712) $ 3,832 $ 8,769 $ (1,319) $ 10,570 Total assets $ 160,609 $ 1,554,233 $ 2,223,890 $ 37,993 $ 3,976,725 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2018 Total interest income $ 163 $ 11,857 $ 16,753 $ 265 $ 29,038 Total interest expense — 3,797 5,593 (460) 8,930 Net interest income 163 8,060 11,160 725 20,108 Provision for loan losses — 674 732 — 1,406 Net interest income after provision for loan losses 163 7,386 10,428 725 18,702 Total noninterest income 10,511 486 652 (336) 11,313 Noninterest expense 3,382 1,736 3,169 1,983 10,270 Income before income taxes 7,292 6,136 7,911 (1,594) 19,745 Income taxes 1,808 1,506 1,931 (561) 4,684 Net income (loss) $ 5,484 $ 4,630 $ 5,980 $ (1,033) $ 15,061 Total assets $ 141,703 $ 1,603,584 $ 1,908,823 21,739 $ 3,675,849 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 10: Recent Accounting Pronouncements The Company is an emerging growth company and as such will be subject to the effective dates noted for the private companies if they differ from the effective dates noted for public companies. FASB ASU 2014‑09, Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014‑09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In March 2016 the FASB issued ASU 2016‑08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the guidance in determining revenue recognition as principal versus agent. In April 2016, the FASB issued ASU 2016‑10, “Identifying Performance Obligations and Licensing,” which provides guidance in accounting for immaterial performance obligations and shipping and handling. In May 2016, the FASB issued ASU 2016‑12, “Narrow‑Scope Improvements and Practical Expedients,” which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for noncash consideration and completed contracts at transition. This ASU also provides a practical expedient for contract modifications. As an emerging growth company, these amendments are effective for annual reporting periods beginning after December 15, 2018, and for interim periods within annual periods beginning after December 15, 2019. The Company’s revenue is primarily comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09. The Company has evaluated the impact of adopting ASU 2014-09, but does not expect the impact to have a material impact on the Company’s financial position or results of operations. FASB ASU 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016‑01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” For public business entities, the amendments in this update include the elimination of the requirement to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, the requirement to use the exit price notion when measuring fair value of financial instruments for disclosure purposes, the requirement to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument‑specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, the requirement for separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or accompanying notes to the financial statements, and the amendments clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available‑for‑sale securities in combination with the entity’s other deferred tax assets. An entity should apply the amendments to this update by means of a cumulative‑effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. As an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within years beginning after December 15, 2019. Early adoption of the amendments in the update is not permitted, except that early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance, are permitted as of the beginning of the fiscal year of adoption for the following amendment: An entity should present separately in other comprehensive income the portion of the total change in the fair value of a liability at fair value in accordance with the fair value option for financial instruments. An entity should apply the amendments to this update by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is continuing to evaluate the impact of adopting this new guidance on its consolidated financial statements, but the adoption of ASU 2016-01 is not expected to have a material impact on the Company’s financial position or results of operation. FASB ASU 2016‑02, Leases In February 2016, the FASB issued ASU 2016‑02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short‑term leases) at the commencement date: · A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and · A right‑of‑use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, “Revenue from Contracts with Customers.” The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off‑balance sheet financing. Lessees (for capital and operating leases) and lessors (for sales‑type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. As an emerging growth company, the amendments in ASU 2016‑02 are effective, as an emerging growth company, beginning after December 15, 2019, and for interim periods for years beginning after January 1, 2020. Management is in the process of gathering documentation on current lease agreements to assess the impact of adopting this guidance on the Company’s financial statements, but its impact is not expected to be material. FASB ASU 2016‑13, Financial Instruments—Credit Losses In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments—Credit Losses”. The amendments in this ASU replace the incurred loss model with a methodology that reflects expected credit losses over the life of the loan and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. ASU 2016‑13 replaces the incurred loss impairment methodology with a new methodology that reflects expected credit losses over the lives of the loans and requires consideration of a broader range of information to form credit loss estimates. The ASU requires an organization to estimate all expected credit losses for financial assets measured at amortized cost, including loans and held‑to‑maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts. Additional disclosures are required. As an emerging growth company, the amendments in ASU 2016‑13 are effective, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company has established a cross-functional committee that is developing a project plan to review modeling data currently available and technology needed to ensure compliance of this standard. The committee has also met with multiple vendors to potentially assist in generating specific loan level details within our core systems, as well as compiling peer and industry data that would be useful in our modeling forecasts. While the Company generally expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, the Company cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial statements. Management continues to expect that the implementation of this ASU may increase the balance of the allowance for loan losses and is continuing to evaluate the potential impact on the Company’s financial position and results of operations. FASB ASU No. 2017‑04, Intangibles—Goodwill and Other (Topic 350) In January 2017, the FASB issued ASU 2017‑04, “Intangibles—Goodwill and Other (Topic 350).” This ASU simplifies the test for goodwill impairment. Specifically, these amendments eliminate Step 2 from the goodwill impairment test, and also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. As an emerging growth company, the amendments in this ASU are effective for annual goodwill impairment tests in fiscal years beginning after December 15, 2021. Management continues to believe that the changes will not have a material effect on the Company’s financial position and results of operations. FASB ASU 2017‑08, Premium Amortization of Purchased Callable Debt In March 2017, the FASB issued ASU 2017‑08, “Premium Amortization of Purchased Callable Debt.” This ASU applies to all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The ASU requires the premium to be amortized to the earliest call date, not the maturity date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. As an emerging growth company, ASU 2017‑08 is effective as to the Company for years beginning after December 15, 2019 and interim periods within years beginning after December 15, 2020. Early adoption is permitted. Management is still in the process of evaluating the impact of adopting this guidance, but does not expect the ASU to have a material effect on the Company’s financial position or results of operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Basis of Presentation | The accompanying consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries, Merchants Bank of Indiana (“Merchants Bank”) and Farmers-Merchants Bank of Illinois (“FMBI”). Merchants Bank’s direct and indirect subsidiaries include Merchants Capital Corp. (“MCC”), Merchants Capital Servicing, LLC (“MCS”), Ash Realty Holdings, LLC (“Ash Realty”), MBI Midtown West, LLC (“MMW”), Natty Mac Funding, Inc. (“NMF”), and OneTrust Funding, Inc. The Company also acquired Farmers-Merchants National Bank of Paxton (‘FMNBP”) on October 1, 2018 through a merger with FMBI, with FMBI as the surviving entity. All these entities are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2018, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of March 31, 2019 and for the three months ended March 31, 2019 and 2018, were prepared in accordance with the instructions for Form 10‑Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2018 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of March 31, 2019 and the results of operations for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018. All interim amounts have not been audited and the results of operations for the three months ended March 31, 2019, herein are not necessarily indicative of the results of operations to be expected for the entire year. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements as of and for the period ended March 31, 2019 include the Company, and its wholly owned subsidiaries, Merchants Bank, and FMBI. Also included are Merchants Bank’s wholly owned subsidiaries, MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, MMW, and OneTrust Funding, Inc. The consolidated financial statements as of and for the period ended March 31, 2018, include the Company and its wholly owned subsidiary, Merchants Bank, and Merchants Bank’s wholly owned subsidiaries, FMBI (after being acquired on January 2, 2018 and excluding results from FMNBP, which was acquired on October 1, 2018), MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, and MMW. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, loan servicing rights and fair values of financial instruments. |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2018 financial statements to conform to the financial statement presentation as of and for the three months ended March 31, 2019. These reclassifications had no effect net income. |
Securities (Tables)
Securities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Securities | |
Schedule of amortized cost and approximate fair values, together with gross unrealized gains and losses | March 31, 2019 Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 10,740 $ 8 $ 5 $ 10,743 Federal agencies 235,621 2 423 235,200 Municipals 12,050 430 — 12,480 Mortgage-backed - Government-sponsored entity (GSE) - residential 38,092 155 1 38,246 Total available-for-sale securities $ 296,503 $ 595 $ 429 $ 296,669 December 31, 2018 Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 11,928 $ 26 $ 13 $ 11,941 Federal agencies 237,894 8 972 236,930 Municipals 21,014 336 18 21,332 Mortgage-backed - Government-sponsored entity (GSE) - residential 60,693 254 79 60,868 Total available-for-sale securities $ 331,529 $ 624 $ 1,082 $ 331,071 |
Schedule of amortized cost and fair value of available-for-sale securities by contractual maturity | March 31, 2019 December 31, 2018 Amortized Fair Amortized Fair Cost Value Cost Value Contractual Maturity (In thousands) Within one year $ 149,649 $ 149,318 $ 179,323 $ 178,581 After one through five years 98,685 98,643 72,470 72,282 After five through ten years 2,120 2,210 7,087 7,203 After ten years 7,957 8,252 11,956 12,137 258,411 258,423 270,836 270,203 Mortgage-backed - Government-sponsored entity (GSE) - residential 38,092 38,246 60,693 60,868 $ 296,503 $ 296,669 $ 331,529 $ 331,071 |
Schedule of gross unrealized losses and fair value of investments with unrealized losses have been in continuous | March 31, 2019 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available-for-sale securities: Treasury notes $ — $ — $ 2,243 $ 5 $ 2,243 $ 5 Federal agencies — — 180,198 423 180,198 423 Municipals — — — — — — Mortgage-backed - Government-sponsored entity (GSE) - residential 914 1 — — 914 1 $ 914 $ 1 $ 182,441 $ 428 $ 183,355 $ 429 December 31, 2018 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available-for-sale securities: Treasury notes $ 1,990 $ 8 $ 995 $ 5 $ 2,985 $ 13 Federal agencies 28,296 97 191,280 875 219,576 $ 972 Municipals 2,051 18 — — 2,051 $ 18 Mortgage-backed - Government-sponsored entity (GSE) - residential 15,543 79 — — 15,543 79 $ 47,880 $ 202 $ 192,275 $ 880 $ 240,155 $ 1,082 |
Loans and Allowance for Loan _2
Loans and Allowance for Loan Losses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Loans and Allowance for Loan Losses | |
Summary of loans | March 31, December 31, 2019 2018 (In thousands) Mortgage warehouse lines of credit $ 412,171 $ 337,332 Residential real estate 409,172 410,871 Multi-family and healthcare financing 965,363 914,393 Commercial and commercial real estate 296,483 299,194 Agricultural production and real estate 81,063 79,255 Consumer and margin loans 17,360 17,082 2,181,612 2,058,127 Less Allowance for loan losses 13,356 12,704 Loans Receivable $ 2,168,256 $ 2,045,423 |
Summary of activity in the allowance for loans and recorded investment by loan portfolio | At or For the Three Months Ended March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 1,068 $ 1,986 $ 6,030 $ 3,051 $ 429 $ 140 $ 12,704 Provision (credit) for loan losses 186 4 347 71 34 7 649 Loans charged to the allowance — — — — — — — Recoveries of loans previously charged off — — — — 3 — 3 Balance, end of period $ 1,254 $ 1,990 $ 6,377 $ 3,122 $ 466 $ 147 $ 13,356 Ending balance: individually evaluated for impairment $ 225 $ — $ — $ 500 $ 20 $ — $ 745 Ending balance: collectively evaluated for impairment $ 1,029 $ 1,990 $ 6,377 $ 2,622 $ 446 $ 147 $ 12,611 Loans Ending balance $ 412,171 $ 409,172 $ 965,363 $ 296,483 $ 81,063 $ 17,360 $ 2,181,612 Ending balance individually evaluated for impairment $ 572 $ 4,255 $ — $ 8,186 $ 347 $ 50 $ 13,410 Ending balance collectively evaluated for impairment $ 411,599 $ 404,917 $ 965,363 $ 288,297 $ 80,716 $ 17,310 $ 2,168,202 For the Three Months Ended March 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 283 $ 1,587 $ 3,502 $ 2,362 $ 320 $ 257 $ 8,311 Provision (credit) for loan losses 223 76 748 323 13 23 1,406 Loans charged to the allowance — — — — — (17) (17) Recoveries of loans previously charged off — 1 — — — 4 5 Balance, end of period $ 506 $ 1,664 $ 4,250 $ 2,685 $ 333 $ 267 $ 9,705 |
Summary of activity in the allowance for loan losses | December 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, December 31, 2018 $ 1,068 $ 1,986 $ 6,030 $ 3,051 $ 429 $ 140 $ 12,704 Ending balance: individually evaluated for impairment $ 225 $ — $ — $ 400 $ 20 $ — $ 645 Ending balance: collectively evaluated for impairment $ 843 $ 1,986 $ 6,030 $ 2,651 $ 409 $ 140 $ 12,059 Loans Balance, December 31, 2018 $ 337,332 $ 410,871 $ 914,393 $ 299,194 $ 79,255 $ 17,082 $ 2,058,127 Ending balance individually evaluated for impairment $ 575 $ 1,606 $ — $ 8,576 $ 370 $ 58 $ 11,185 Ending balance collectively evaluated for impairment $ 336,757 $ 409,265 $ 914,393 $ 290,618 $ 78,885 $ 17,024 $ 2,046,942 |
Schedule of credit risk profile of loan portfolio | March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 590 $ 56,962 $ 12,451 $ 2,791 $ 381 $ 73,175 Substandard 572 4,255 — 8,186 347 50 13,410 Doubtful — — — — — — — Acceptable and Above 411,599 404,327 908,401 275,846 77,925 16,929 2,095,027 Total $ 412,171 $ 409,172 $ 965,363 $ 296,483 $ 81,063 $ 17,360 $ 2,181,612 December 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 443 $ 71,734 $ 14,650 $ 3,096 $ 681 $ 90,604 Substandard 575 1,606 — 8,576 370 58 11,185 Doubtful — — — — — — — Acceptable and Above 336,757 408,822 842,659 275,968 75,789 16,343 1,956,338 Total $ 337,332 $ 410,871 $ 914,393 $ 299,194 $ 79,255 $ 17,082 $ 2,058,127 |
Schedule of aging analysis of the recorded investment in loans | March 31, 2019 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ 324 $ 324 $ 411,847 $ 412,171 RES RE 3,431 237 998 4,666 404,506 409,172 MF RE — — — — 965,363 965,363 CML & CRE 191 306 175 672 295,811 296,483 AG & AGRE 53 — 577 630 80,433 81,063 CON & MAR 13 — 21 34 17,326 17,360 $ 3,688 $ 543 $ 2,095 $ 6,326 $ 2,175,286 $ 2,181,612 December 31, 2018 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ 324 $ 324 $ 337,008 $ 337,332 RES RE 579 178 825 1,582 409,289 410,871 MF RE — — — — 914,393 914,393 CML & CRE 245 52 253 550 298,644 299,194 AG & AGRE 91 — 588 679 78,576 79,255 CON & MAR 2 52 28 82 17,000 17,082 $ 917 $ 282 $ 2,018 $ 3,217 $ 2,054,910 $ 2,058,127 |
Schedule of components of impaired loans and specific valuation allowance | March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 248 $ 4,255 $ — $ 5,907 $ 88 $ 50 $ 10,548 Unpaid principal balance 248 4,255 — 5,907 88 50 10,548 Impaired loans with a specific allowance: Recorded investment 324 — — 2,279 259 — 2,862 Unpaid principal balance 324 — — 2,279 259 — 2,862 Specific allowance 225 — — 500 20 — 745 Total impaired loans: Recorded investment 572 4,255 — 8,186 347 50 13,410 Unpaid principal balance 572 4,255 — 8,186 347 50 13,410 Specific allowance 225 — — 500 20 — 745 December 31, 2018 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 251 $ 1,606 $ — $ 5,636 $ 88 $ 58 $ 7,639 Unpaid principal balance 251 1,606 — 5,636 88 58 7,639 Impaired loans with a specific allowance: Recorded investment 324 — — 2,940 282 — 3,546 Unpaid principal balance 324 — — 2,940 282 — 3,546 Specific allowance 225 — — 400 20 — 645 Total impaired loans: Recorded investment 575 1,606 — 8,576 370 58 11,185 Unpaid principal balance 575 1,606 — 8,576 370 58 11,185 Specific allowance 225 — — 400 20 — 645 |
Schedule of average recorded investment and interest income recognized in impaired loans | MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Three months ended March 31, 2019: Average recorded investment in impaired loans $ 574 $ 2,806 $ — $ 8,468 $ 364 $ 48 $ 12,260 Interest income recognized — 15 — 140 — — 155 Three months ended March 31, 2018: Average recorded investment in impaired loans $ 1,352 $ 729 $ 117 $ 6,587 $ 635 $ 146 $ 9,566 Interest income recognized 19 3 3 46 — — 71 |
Schedule of nonaccrual loans and loans past due 90 days or more and still accruing | March 31, December 31, 2019 2018 Total Loans > Total Loans > 90 Days & 90 Days & Nonaccrual Accruing Nonaccrual Accruing (In thousands) MTG WHLOC $ 572 $ — $ 575 $ — RES RE 702 454 893 74 MF RE — — — — CML & CRE 228 — 136 117 AG & AGRE 259 317 282 307 CON & MAR 13 8 18 9 $ 1,774 $ 779 $ 1,904 $ 507 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Regulatory Matters | |
Summary of bank's actual capital amounts and ratios | The Company, Merchants Bank, and FMBI’s actual capital amounts and ratios are also presented in the following tables. Minimum Amount Required for Minimum Amount Adequately To Be Well Actual Capitalized (1) Capitalized (1) Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) March 31, 2019 Total capital (1) (to risk-weighted assets) Company $ 453,361 13.3 % $ 272,136 8.0 % $ — N/A Merchants Bank 478,574 14.6 % 262,223 8.0 % 327,778 10.0 % FMBI 19,384 15.7 % 9,876 8.0 % 12,345 10.0 % Tier 1 capital (1) (to risk-weighted assets) Company 440,007 12.9 % 204,102 6.0 % — N/A Merchants Bank 465,636 14.2 % 196,667 6.0 % 262,223 8.0 % FMBI 18,966 15.4 % 7,407 6.0 % 9,876 8.0 % Common Equity Tier 1 capital (1) (to risk-weighted assets) Company 350,157 10.3 % 153,077 4.5 % — N/A Merchants Bank 465,636 14.2 % 147,500 4.5 % 213,056 6.5 % FMBI 18,966 15.4 % 5,555 4.5 % 8,025 6.5 % Tier 1 capital (1) (to average assets) Company 440,007 12.0 % 146,417 4.0 % — N/A Merchants Bank 465,636 13.3 % 140,344 4.0 % 175,430 5.0 % FMBI 18,966 11.9 % 6,384 4.0 % 7,980 5.0 % Minimum Minimum Amount Required Amount To Be for Adequately Well Actual Capitalized (1) Capitalized (1) Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2018 Total capital (1) (to risk-weighted assets) Company $ 393,654 12.3 % $ 255,884 8.0 % $ — N/A Merchants Bank 412,386 13.3 % 248,290 8.0 % 310,363 10.0 % FMBI 17,537 18.6 % 7,559 8.0 % 9,448 10.0 % Tier 1 capital (1) (to risk-weighted assets) Company 380,950 11.9 % 191,913 6.0 % — N/A Merchants Bank 399,815 12.9 % 186,218 6.0 % 248,290 8.0 % FMBI 17,404 18.4 % 5,669 6.0 % 7,559 8.0 % Common Equity Tier 1 capital (1) (to risk-weighted assets) Company 339,369 10.6 % 143,935 4.5 % — N/A Merchants Bank 399,815 12.9 % 139,663 4.5 % 201,736 6.5 % FMBI 17,404 18.4 % 4,252 4.5 % 6,141 6.5 % Tier 1 capital (1) (to average assets) Company 380,950 10.0 % 152,081 4.0 % — N/A Merchants Bank 399,815 11.0 % 145,723 4.0 % 182,154 5.0 % FMBI 17,404 10.8 % 6,453 4.0 % 8,066 5.0 % 1 As defined by regulatory agencies. Beginning January 1, 2015, a new Basel III Capital Rule applied to Merchants Bank. The following table lists the capital categories and ratios determined by the Board of Governors of the Federal Reserve System and the FDIC. Common Equity Total Risk-based Tier 1 Risk-based Tier 1 Risk-based Tier 1 Capital Category Capital ratio Capital ratio Capital ratio Leverage ratio Well capitalized 10 % 8 % 6.5 % 5 % Adequately capitalized 8 6 4.5 4 Undercapitalized <8 <6 <4.5 <4 Significantly undercapitalized <6 <4 <3 <3 Critically undercapitalized Tangible Equity/Total Assets </= 2% |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Financial Instruments | |
Summary of notional amount and fair value of interest rate locks and forward contracts utilized | Notional Fair Value Amount Balance Sheet Location Asset (Liability) March 31, 2019 (In thousands) (In thousands) Interest rate lock commitments $ 9,706 Derivative assets/liabilities $ 71 $ 1 Forward contracts 15,260 Derivative assets/liabilities — 18 $ 71 $ 19 Notional Fair Value Amount Balance Sheet Location Asset (Liability) December 31, 2018 (In thousands) (In thousands) Interest rate lock commitments $ 8,812 Derivative assets/liabilities $ 70 $ — Forward contracts 19,640 Derivative assets/liabilities — 9 $ 70 $ 9 |
Summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | Three Months Ended March 31, 2019 2018 (In thousands) Interest rate lock commitments $ — $ 114 Forward contracts (1) (5) 105 Net derivative gains (losses) $ (5) $ 219 _____________________________________ (1) Amount includes pair-off settlements. |
Disclosures about Fair Value _2
Disclosures about Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosures about Fair Value of Assets and Liabilities | |
Schedule of fair value measurement of assets measured at fair value on recurring basis | Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) March 31, 2019 Trading securities $ 129,914 $ — $ 129,914 $ — Available-for-sale securities: Treasury notes 10,743 10,743 — — Federal agencies 235,200 — 235,200 — Municipals 12,480 — 12,480 — Mortgage-backed - Government-sponsored entity (GSE) - residential 38,246 — 38,246 — Loans held for sale 6,307 — 6,307 — Mortgage servicing rights 76,249 — — 76,249 Derivative assets - interest rate lock commitments 71 — — 71 Derivative liabilities - interest rate lock commitments 1 — — 1 Derivative liabilities - forward contracts 18 — 18 — December 31, 2018 Trading securities $ 163,419 $ — $ 163,419 $ — Available-for-sale securities: Treasury notes 11,941 11,941 — — Federal agencies 236,930 — 236,930 — Municipals 21,332 — 21,332 — Mortgage-backed - Government-sponsored entity (GSE) - residential 60,868 — 60,868 — Loans held for sale 11,886 — 11,886 — Mortgage servicing rights 77,844 — — 77,844 Derivative assets - interest rate lock commitments 70 — — 70 Derivative liabilities - forward contracts 9 — 9 — |
Schedule of Level 3 reconciliation of recurring fair value measurements | Three Months Ended March 31, 2019 2018 (In thousands) Mortgage servicing rights Balance, beginning of period $ 77,844 $ 66,079 Additions Originated and purchased servicing 1,020 3,452 Subtractions Paydowns (1,110) (1,370) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model (1,505) (893) Balance, end of period $ 76,249 $ 67,268 Available-for-sale securities - Municipals Balance, beginning of period $ — $ 6,688 Additions Purchased securities — — Subtractions Paydowns — (258) Sales — — Unrealized gains (losses) included in other comprehensive income — — Balance, end of period $ — $ 6,430 Derivative Assets - interest rate lock commitments Balance, beginning of period $ 70 $ — Purchases — — Changes in fair value 1 116 Balance, end of period $ 71 $ 116 Derivative Liabilities - interest rate lock commitments Balance, beginning of period $ — $ — Purchases — — Changes in fair value 1 2 Balance, end of period $ 1 $ 2 |
Schedule of fair value measurement of assets and liabilities measured at fair value on nonrecurring basis | Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) March 31, 2019 Impaired loans (collateral-dependent) $ 1,600 $ — $ — $ 1,600 December 31, 2018 Impaired loans (collateral-dependent) $ 2,639 $ — $ — $ 2,639 |
Schedule of quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill | Valuation Fair Value Technique Unobservable Inputs Range (In thousands) At March 31, 2019: Collateral-dependent impaired loans $ 1,600 Market comparable properties Marketability discount 32% Mortgage servicing rights $ 76,249 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 1% - 30% Derivative assets - interest rate lock commitments $ 71 Discounted cash flow loan closing rates 63-99% Derivative liabilities - interest rate lock commitments $ 1 Discounted cash flow loan closing rates 63-99% At December 31, 2018: Collateral-dependent impaired loans $ 2,639 Market comparable properties Marketability discount 17%-59% Mortgage servicing rights $ 77,844 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 1% - 30% Derivative assets - interest rate lock commitments $ 70 Discounted cash flow loan closing rates 95-100% |
Schedule of carrying amount and estimated fair value of financial instruments | Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Carrying Fair Assets Inputs Inputs Assets Value Value (Level 1) (Level 2) (Level 3) (In thousands) March 31, 2019 Financial assets: Cash and cash equivalents $ 313,451 $ 313,451 $ 313,451 $ — $ — Securities purchased under agreements to resell 6,838 6,838 — 6,838 — FHLB stock 18,880 18,880 — 18,880 — Loans held for sale 875,764 875,764 — 875,764 — Loans, net 2,168,256 2,170,521 — — 2,170,521 Interest receivable 14,365 14,365 — 14,365 — Financial liabilities: Deposits 3,121,027 3,120,546 2,438,323 682,223 — Lines of credit 31,605 31,605 — 31,605 — Short-term subordinated debt 13,486 13,486 — 13,486 — FHLB advances 292,940 292,823 — 292,823 — Interest payable 4,930 4,930 — 4,930 — December 31, 2018 Financial assets: Cash and cash equivalents $ 336,524 $ 336,524 $ 336,524 $ — $ — Securities purchased under agreements to resell 6,875 6,875 — 6,875 — FHLB stock 7,974 7,974 — 7,974 — Loans held for sale 820,569 820,569 — 820,569 — Loans, net 2,045,423 2,041,772 — — 2,041,772 Interest receivable 13,827 13,827 — 13,827 — Financial liabilities: Deposits 3,231,086 3,230,397 2,550,632 679,765 — Lines of credit 33,150 33,150 — 33,150 — Short-term subordinated debt 10,582 10,582 — 10,582 — FHLB advances 151,721 151,723 — 151,723 — Interest payable 4,132 4,132 — 4,132 — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per share | |
Schedule of computation of earnings per share | Three Month Periods Ended March 31, 2019 2018 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 10,570 $ 15,061 Dividends on preferred stock (833) (833) Net income allocated to common shareholders $ 9,737 $ 14,228 Basic earnings per share 28,702,250 $ 0.34 28,690,876 $ 0.50 Effect of dilutive securities-restricted stock awards 35,189 19,604 Diluted earnings per share 28,737,439 $ 0.34 28,710,480 $ 0.50 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Information | |
Schedule of business segment financial information | Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2019 Total interest income $ 331 $ 14,380 $ 24,492 $ 471 $ 39,674 Total interest expense — 7,529 8,982 (968) 15,543 Net interest income 331 6,851 15,510 1,439 24,131 Provision for loan losses — 133 516 — 649 Net interest income after provision for loan losses 331 6,718 14,994 1,439 23,482 Total noninterest income 2,691 753 883 (663) 3,664 Total noninterest expense 3,977 2,336 4,120 2,602 13,035 Income before income taxes (955) 5,135 11,757 (1,826) 14,111 Income taxes (243) 1,303 2,988 (507) 3,541 Net income (loss) $ (712) $ 3,832 $ 8,769 $ (1,319) $ 10,570 Total assets $ 160,609 $ 1,554,233 $ 2,223,890 $ 37,993 $ 3,976,725 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2018 Total interest income $ 163 $ 11,857 $ 16,753 $ 265 $ 29,038 Total interest expense — 3,797 5,593 (460) 8,930 Net interest income 163 8,060 11,160 725 20,108 Provision for loan losses — 674 732 — 1,406 Net interest income after provision for loan losses 163 7,386 10,428 725 18,702 Total noninterest income 10,511 486 652 (336) 11,313 Noninterest expense 3,382 1,736 3,169 1,983 10,270 Income before income taxes 7,292 6,136 7,911 (1,594) 19,745 Income taxes 1,808 1,506 1,931 (561) 4,684 Net income (loss) $ 5,484 $ 4,630 $ 5,980 $ (1,033) $ 15,061 Total assets $ 141,703 $ 1,603,584 $ 1,908,823 21,739 $ 3,675,849 |
Basis of Presentation - Public
Basis of Presentation - Public Offering of Preferred Stock (Details) - USD ($) | Apr. 12, 2019 | Mar. 28, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Public Offering of Preferred Stock | ||||
Net proceeds | $ 48,269,000 | |||
Series A preferred stock | ||||
Public Offering of Preferred Stock | ||||
Net proceeds | $ 48,300,000 | |||
7% Preferred Stock | ||||
Public Offering of Preferred Stock | ||||
Preferred stock, dividend rate (as a percent) | 7.00% | |||
Offering costs | $ 1,731,000 | |||
7% Preferred Stock | Series A preferred stock | ||||
Public Offering of Preferred Stock | ||||
Shares issued (in shares) | 81,800 | 2,000,000 | 2,000,000 | |
Preferred stock, dividend rate (as a percent) | 7.00% | 7.00% | ||
Preferred stock liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | |
Aggregate gross offering proceeds for the shares issued | $ 50,000,000 | |||
Offering costs | $ 1,700,000 | |||
Net proceeds | $ 2,000,000 | |||
Underwriting discounts | $ 41,000 |
Basis of Presentation - Recent
Basis of Presentation - Recent Acquisitions (Details) - USD ($) | Oct. 01, 2018 | Jan. 02, 2018 | Dec. 31, 2018 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Acquisitions | |||||||
Goodwill | $ 17,477,000 | $ 17,144,000 | |||||
Total assets | 3,884,163,000 | 3,976,725,000 | $ 3,675,849,000 | ||||
Fair Value of available for sale securities | 331,071,000 | 296,669,000 | |||||
Deposits | 3,231,086,000 | 3,121,027,000 | |||||
Loans Receivable, Net | 2,045,423,000 | $ 2,168,256,000 | |||||
FMBI | |||||||
Acquisitions | |||||||
Total assets | $ 43,000,000 | ||||||
FMBI | Stock Purchase Agreement | |||||||
Acquisitions | |||||||
Total cost | $ 5,500,000 | ||||||
Goodwill | 988,000 | ||||||
Intangible assets | 478,000 | ||||||
Time deposits | 16,700,000 | ||||||
Time deposits at fair value | 16,900,000 | ||||||
Fair value premium of acquired time deposits | $ 185,000 | ||||||
Time deposits, fair value premium, accretion period | 20 months | ||||||
Acquired loan portfolio | $ 27,900,000 | ||||||
Acquired loan portfolio at fair value | 27,500,000 | ||||||
Fair value discount on acquired loan portfolio | $ 458,000 | ||||||
Acquired loan portfolio, fair value discount, accretion period | 39 years | ||||||
FMBI | Core Deposits | Stock Purchase Agreement | |||||||
Acquisitions | |||||||
Useful life | 10 years | ||||||
FM Bancorp, Inc | |||||||
Acquisitions | |||||||
Outstanding shares of the acquiree | 27,537 | ||||||
Share price per share | $ 795.29 | ||||||
Total cost | $ 21,900,000 | ||||||
Goodwill | 6,900,000 | ||||||
Intangible assets | 1,900,000 | ||||||
Fair Value of available for sale securities | 66,300,000 | ||||||
Fair value discount on available for sale securities | 1,000,000 | ||||||
Time deposits | 95,700,000 | ||||||
Time deposits at fair value | 95,700,000 | ||||||
Acquired loan portfolio | 35,400,000 | ||||||
Acquired loan portfolio at fair value | 34,800,000 | ||||||
Fair value discount on acquired loan portfolio | 625,000 | ||||||
Discount related to interest assumption | 279,000 | ||||||
Discount related to credit assumption | $ 346,000 | ||||||
Acquired loan portfolio, fair value discount, accretion period | 72 months | ||||||
FM Bancorp, Inc | Core Deposits | |||||||
Acquisitions | |||||||
Useful life | 10 years | ||||||
NattyMac, LLC | |||||||
Acquisitions | |||||||
Goodwill | 5,000,000 | ||||||
Repayments of subordinated debt | $ 30,000,000 | ||||||
FM Bancorp | |||||||
Acquisitions | |||||||
Total assets | $ 110,000,000 | ||||||
Fair Value of available for sale securities | 66,300,000 | ||||||
Time deposits | 95,700,000 | ||||||
Loans Receivable, Net | $ 35,000,000 |
Securities - Trading Securities
Securities - Trading Securities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Trading Securities | ||
Unrealized gains included in trading securities | $ 545,000 | $ 1,500,000 |
Securities - Amortized Cost to
Securities - Amortized Cost to Approximate Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Available-for-sale securities: | ||
Amortized Cost | $ 296,503 | $ 331,529 |
Gross Unrealized Gains | 595 | 624 |
Gross Unrealized Losses | 429 | 1,082 |
Fair Value of available for sale securities | 296,669 | 331,071 |
Treasury notes | ||
Available-for-sale securities: | ||
Amortized Cost | 10,740 | 11,928 |
Gross Unrealized Gains | 8 | 26 |
Gross Unrealized Losses | 5 | 13 |
Fair Value of available for sale securities | 10,743 | 11,941 |
Federal agencies | ||
Available-for-sale securities: | ||
Amortized Cost | 235,621 | 237,894 |
Gross Unrealized Gains | 2 | 8 |
Gross Unrealized Losses | 423 | 972 |
Fair Value of available for sale securities | 235,200 | 236,930 |
Municipals | ||
Available-for-sale securities: | ||
Amortized Cost | 12,050 | 21,014 |
Gross Unrealized Gains | 430 | 336 |
Gross Unrealized Losses | 18 | |
Fair Value of available for sale securities | 12,480 | 21,332 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Available-for-sale securities: | ||
Amortized Cost | 38,092 | 60,693 |
Gross Unrealized Gains | 155 | 254 |
Gross Unrealized Losses | 1 | 79 |
Fair Value of available for sale securities | $ 38,246 | $ 60,868 |
Securities - Contractual Maturi
Securities - Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Contractual Maturities, Amortized Cost | ||
Within one year | $ 149,649 | $ 179,323 |
After one through five years | 98,685 | 72,470 |
After five through ten years | 2,120 | 7,087 |
After ten years | 7,957 | 11,956 |
Amortized Costs, Gross | 258,411 | 270,836 |
Amortized Costs, Net | 296,503 | 331,529 |
Contractual Maturities, Fair Value | ||
Within one year | 149,318 | 178,581 |
After one through five years | 98,643 | 72,282 |
After five through ten years | 2,210 | 7,203 |
After ten years | 8,252 | 12,137 |
Fair Value, Gross | 258,423 | 270,203 |
Fair Value, Net | 296,669 | 331,071 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | 183,355 | 240,155 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Contractual Maturities, Amortized Cost | ||
Amortized Costs, Mortgage-backed - Government-sponsored entity (GSE) - residential | 38,092 | 60,693 |
Amortized Costs, Net | 38,092 | 60,693 |
Contractual Maturities, Fair Value | ||
Fair Value, Mortgage-backed - Government-sponsored entity (GSE) - residential | 38,246 | 60,868 |
Fair Value, Net | 38,246 | 60,868 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ 914 | $ 15,543 |
Securities - Sale of securities
Securities - Sale of securities (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Securities | |
Proceeds from the sale of available-for-sale securities | $ 31,086,000 |
Net gain on sale of securities available for sale | 127,000 |
Gains on sale of securities available for sale | 361,000 |
Losses on sale of securities available for sale | $ 234,000 |
Securities - Continuous Unreali
Securities - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | $ 914 | $ 47,880 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 182,441 | 192,275 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 183,355 | 240,155 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 1 | 202 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | 428 | 880 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 429 | 1,082 |
Treasury notes | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,990 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 2,243 | 995 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 2,243 | 2,985 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 8 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | 5 | 5 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 5 | 13 |
Federal agencies | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 28,296 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 180,198 | 191,280 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 180,198 | 219,576 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 97 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | 423 | 875 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 423 | 972 |
Municipals | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 2,051 | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 2,051 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 18 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 18 | |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 914 | 15,543 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 914 | 15,543 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 1 | 79 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ 1 | $ 79 |
Loans and Allowance for Loan _3
Loans and Allowance for Loan Losses - Summary of Loans By Classification (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Loans and Allowance for Loan Losses | ||||
Loans | $ 2,181,612 | $ 2,058,127 | ||
Allowance for loan losses | 13,356 | 12,704 | $ 9,705 | $ 8,311 |
Loans and Leases Receivable, Net Amount, Total | 2,168,256 | 2,045,423 | ||
Mortgage warehouse lines of credit | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 412,171 | 337,332 | ||
Allowance for loan losses | 1,254 | 1,068 | 506 | 283 |
Residential real estate | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 409,172 | 410,871 | ||
Allowance for loan losses | 1,990 | 1,986 | 1,664 | 1,587 |
Multi-family and healthcare financing | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 965,363 | 914,393 | ||
Allowance for loan losses | 6,377 | 6,030 | 4,250 | 3,502 |
Commercial and commercial real estate | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 296,483 | 299,194 | ||
Allowance for loan losses | 3,122 | 3,051 | 2,685 | 2,362 |
Agricultural production and real estate | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 81,063 | 79,255 | ||
Allowance for loan losses | 466 | 429 | 333 | 320 |
Consumer and margin loans | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 17,360 | 17,082 | ||
Allowance for loan losses | $ 147 | $ 140 | $ 267 | $ 257 |
Loans and Allowance for Loan _4
Loans and Allowance for Loan Losses - Allowance For Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Allowance for loan losses | |||
Balance, beginning of period | $ 12,704 | $ 8,311 | |
Provision (credit) for loan losses | 649 | 1,406 | |
Loans charged to the allowance | (17) | ||
Recoveries of loans previously charged off | 3 | 5 | |
Balance, end of period | 13,356 | 9,705 | |
Ending balance: individually evaluated for impairment | 745 | $ 645 | |
Ending balance: collectively evaluated for impairment | 12,611 | 12,059 | |
Loans | |||
Ending balance | 2,181,612 | 2,058,127 | |
Ending balance individually evaluated for impairment | 13,410 | 11,185 | |
Ending balance: collectively evaluated for impairment | 2,168,202 | 2,046,942 | |
Mortgage warehouse lines of credit | |||
Allowance for loan losses | |||
Balance, beginning of period | 1,068 | 283 | |
Provision (credit) for loan losses | 186 | 223 | |
Balance, end of period | 1,254 | 506 | |
Ending balance: individually evaluated for impairment | 225 | 225 | |
Ending balance: collectively evaluated for impairment | 1,029 | 843 | |
Loans | |||
Ending balance | 412,171 | 337,332 | |
Ending balance individually evaluated for impairment | 572 | 575 | |
Ending balance: collectively evaluated for impairment | 411,599 | 336,757 | |
Residential real estate | |||
Allowance for loan losses | |||
Balance, beginning of period | 1,986 | 1,587 | |
Provision (credit) for loan losses | 4 | 76 | |
Recoveries of loans previously charged off | 1 | ||
Balance, end of period | 1,990 | 1,664 | |
Ending balance: collectively evaluated for impairment | 1,990 | 1,986 | |
Loans | |||
Ending balance | 409,172 | 410,871 | |
Ending balance individually evaluated for impairment | 4,255 | 1,606 | |
Ending balance: collectively evaluated for impairment | 404,917 | 409,265 | |
Multi-family and healthcare financing | |||
Allowance for loan losses | |||
Balance, beginning of period | 6,030 | 3,502 | |
Provision (credit) for loan losses | 347 | 748 | |
Balance, end of period | 6,377 | 4,250 | |
Ending balance: collectively evaluated for impairment | 6,377 | 6,030 | |
Loans | |||
Ending balance | 965,363 | 914,393 | |
Ending balance: collectively evaluated for impairment | 965,363 | 914,393 | |
Commercial and commercial real estate | |||
Allowance for loan losses | |||
Balance, beginning of period | 3,051 | 2,362 | |
Provision (credit) for loan losses | 71 | 323 | |
Balance, end of period | 3,122 | 2,685 | |
Ending balance: individually evaluated for impairment | 500 | 400 | |
Ending balance: collectively evaluated for impairment | 2,622 | 2,651 | |
Loans | |||
Ending balance | 296,483 | 299,194 | |
Ending balance individually evaluated for impairment | 8,186 | 8,576 | |
Ending balance: collectively evaluated for impairment | 288,297 | 290,618 | |
Agricultural production and real estate | |||
Allowance for loan losses | |||
Balance, beginning of period | 429 | 320 | |
Provision (credit) for loan losses | 34 | 13 | |
Recoveries of loans previously charged off | 3 | ||
Balance, end of period | 466 | 333 | |
Ending balance: individually evaluated for impairment | 20 | 20 | |
Ending balance: collectively evaluated for impairment | 446 | 409 | |
Loans | |||
Ending balance | 81,063 | 79,255 | |
Ending balance individually evaluated for impairment | 347 | 370 | |
Ending balance: collectively evaluated for impairment | 80,716 | 78,885 | |
Consumer and margin loans | |||
Allowance for loan losses | |||
Balance, beginning of period | 140 | 257 | |
Provision (credit) for loan losses | 7 | 23 | |
Loans charged to the allowance | (17) | ||
Recoveries of loans previously charged off | 4 | ||
Balance, end of period | 147 | $ 267 | |
Ending balance: collectively evaluated for impairment | 147 | 140 | |
Loans | |||
Ending balance | 17,360 | 17,082 | |
Ending balance individually evaluated for impairment | 50 | 58 | |
Ending balance: collectively evaluated for impairment | $ 17,310 | $ 17,024 |
Loans and Allowance for Loan _5
Loans and Allowance for Loan Losses - Credit Risk Profile of Loan Portfolio (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Credit risk profile of portfolio | ||
Loans | $ 2,181,612 | $ 2,058,127 |
Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 73,175 | 90,604 |
Substandard | ||
Credit risk profile of portfolio | ||
Loans | 13,410 | 11,185 |
Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 2,095,027 | 1,956,338 |
Mortgage warehouse lines of credit | ||
Credit risk profile of portfolio | ||
Loans | 412,171 | 337,332 |
Mortgage warehouse lines of credit | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 572 | 575 |
Mortgage warehouse lines of credit | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 411,599 | 336,757 |
Residential real estate | ||
Credit risk profile of portfolio | ||
Loans | 409,172 | 410,871 |
Residential real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 590 | 443 |
Residential real estate | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 4,255 | 1,606 |
Residential real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 404,327 | 408,822 |
Multi-family and healthcare financing | ||
Credit risk profile of portfolio | ||
Loans | 965,363 | 914,393 |
Multi-family and healthcare financing | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 56,962 | 71,734 |
Multi-family and healthcare financing | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 908,401 | 842,659 |
Commercial and commercial real estate | ||
Credit risk profile of portfolio | ||
Loans | 296,483 | 299,194 |
Commercial and commercial real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 12,451 | 14,650 |
Commercial and commercial real estate | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 8,186 | 8,576 |
Commercial and commercial real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 275,846 | 275,968 |
Agricultural production and real estate | ||
Credit risk profile of portfolio | ||
Loans | 81,063 | 79,255 |
Agricultural production and real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 2,791 | 3,096 |
Agricultural production and real estate | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 347 | 370 |
Agricultural production and real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 77,925 | 75,789 |
Consumer and margin loans | ||
Credit risk profile of portfolio | ||
Loans | 17,360 | 17,082 |
Consumer and margin loans | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 381 | 681 |
Consumer and margin loans | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 50 | 58 |
Consumer and margin loans | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | $ 16,929 | $ 16,343 |
Loans and Allowance for Loan _6
Loans and Allowance for Loan Losses - Aging Analysis Of The Recorded Investment In Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Aging analysis of loan portfolio | ||
Past due loans | $ 6,326 | $ 3,217 |
Current loans | 2,175,286 | 2,054,910 |
Loans and Leases Receivable, Net of Deferred Income, Total | 2,181,612 | 2,058,127 |
30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 3,688 | 917 |
60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 543 | 282 |
Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 2,095 | 2,018 |
Mortgage warehouse lines of credit | ||
Aging analysis of loan portfolio | ||
Past due loans | 324 | 324 |
Current loans | 411,847 | 337,008 |
Loans and Leases Receivable, Net of Deferred Income, Total | 412,171 | 337,332 |
Mortgage warehouse lines of credit | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 324 | 324 |
Residential real estate | ||
Aging analysis of loan portfolio | ||
Past due loans | 4,666 | 1,582 |
Current loans | 404,506 | 409,289 |
Loans and Leases Receivable, Net of Deferred Income, Total | 409,172 | 410,871 |
Residential real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 3,431 | 579 |
Residential real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 237 | 178 |
Residential real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 998 | 825 |
Multi-family and healthcare financing | ||
Aging analysis of loan portfolio | ||
Current loans | 965,363 | 914,393 |
Loans and Leases Receivable, Net of Deferred Income, Total | 965,363 | 914,393 |
Commercial and commercial real estate | ||
Aging analysis of loan portfolio | ||
Past due loans | 672 | 550 |
Current loans | 295,811 | 298,644 |
Loans and Leases Receivable, Net of Deferred Income, Total | 296,483 | 299,194 |
Commercial and commercial real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 191 | 245 |
Commercial and commercial real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 306 | 52 |
Commercial and commercial real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 175 | 253 |
Agricultural production and real estate | ||
Aging analysis of loan portfolio | ||
Past due loans | 630 | 679 |
Current loans | 80,433 | 78,576 |
Loans and Leases Receivable, Net of Deferred Income, Total | 81,063 | 79,255 |
Agricultural production and real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 53 | 91 |
Agricultural production and real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 577 | 588 |
Consumer and margin loans | ||
Aging analysis of loan portfolio | ||
Past due loans | 34 | 82 |
Current loans | 17,326 | 17,000 |
Loans and Leases Receivable, Net of Deferred Income, Total | 17,360 | 17,082 |
Consumer and margin loans | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 13 | 2 |
Consumer and margin loans | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 52 | |
Consumer and margin loans | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | $ 21 | $ 28 |
Loans and Allowance for Loan _7
Loans and Allowance for Loan Losses - Impaired Loans and Specific Valuation Allowance (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Impaired loans without a specific allowance: | ||
Recorded investment | $ 10,548 | $ 7,639 |
Unpaid principal balance | 10,548 | 7,639 |
Impaired loans with a specific allowance: | ||
Recorded investment | 2,862 | 3,546 |
Unpaid principal balance | 2,862 | 3,546 |
Specific allowance | 745 | 645 |
Total impaired loans: | ||
Recorded investments | 13,410 | 11,185 |
Unpaid principal balance | 13,410 | 11,185 |
Specific allowance | 745 | 645 |
Mortgage warehouse lines of credit | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 248 | 251 |
Unpaid principal balance | 248 | 251 |
Impaired loans with a specific allowance: | ||
Recorded investment | 324 | 324 |
Unpaid principal balance | 324 | 324 |
Specific allowance | 225 | 225 |
Total impaired loans: | ||
Recorded investments | 572 | 575 |
Unpaid principal balance | 572 | 575 |
Specific allowance | 225 | 225 |
Residential real estate | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 4,255 | 1,606 |
Unpaid principal balance | 4,255 | 1,606 |
Total impaired loans: | ||
Recorded investments | 4,255 | 1,606 |
Unpaid principal balance | 4,255 | 1,606 |
Commercial and commercial real estate | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 5,907 | 5,636 |
Unpaid principal balance | 5,907 | 5,636 |
Impaired loans with a specific allowance: | ||
Recorded investment | 2,279 | 2,940 |
Unpaid principal balance | 2,279 | 2,940 |
Specific allowance | 500 | 400 |
Total impaired loans: | ||
Recorded investments | 8,186 | 8,576 |
Unpaid principal balance | 8,186 | 8,576 |
Specific allowance | 500 | 400 |
Agricultural production and real estate | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 88 | 88 |
Unpaid principal balance | 88 | 88 |
Impaired loans with a specific allowance: | ||
Recorded investment | 259 | 282 |
Unpaid principal balance | 259 | 282 |
Specific allowance | 20 | 20 |
Total impaired loans: | ||
Recorded investments | 347 | 370 |
Unpaid principal balance | 347 | 370 |
Specific allowance | 20 | 20 |
Consumer and margin loans | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 50 | 58 |
Unpaid principal balance | 50 | 58 |
Total impaired loans: | ||
Recorded investments | 50 | 58 |
Unpaid principal balance | $ 50 | $ 58 |
Loans and Allowance for Loan _8
Loans and Allowance for Loan Losses - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Impaired Loans | ||
Average recorded investment in impaired loans | $ 12,260 | $ 9,566 |
Interest income recognized | 155 | |
Interest income recognized | 71 | |
Mortgage warehouse lines of credit | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 574 | 1,352 |
Interest income recognized | 19 | |
Residential real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 2,806 | 729 |
Interest income recognized | 15 | |
Interest income recognized | 3 | |
Multi-family and healthcare financing | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 117 | |
Interest income recognized | 3 | |
Commercial and commercial real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 8,468 | 6,587 |
Interest income recognized | 140 | |
Interest income recognized | 46 | |
Agricultural production and real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 364 | 635 |
Consumer and margin loans | ||
Impaired Loans | ||
Average recorded investment in impaired loans | $ 48 | $ 146 |
Loans and Allowance for Loan _9
Loans and Allowance for Loan Losses - Non Accrual Loans and Loans Past Due 90 Days Or More and Still Accruing (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Loan portfolio past due loans | ||
Nonaccrual | $ 1,774 | $ 1,904 |
Total Loans Greater than 90 Days & Accruing | 779 | 507 |
Mortgage warehouse lines of credit | ||
Loan portfolio past due loans | ||
Nonaccrual | 572 | 575 |
Residential real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 702 | 893 |
Total Loans Greater than 90 Days & Accruing | 454 | 74 |
Commercial and commercial real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 228 | 136 |
Total Loans Greater than 90 Days & Accruing | 117 | |
Agricultural production and real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 259 | 282 |
Total Loans Greater than 90 Days & Accruing | 317 | 307 |
Consumer and margin loans | ||
Loan portfolio past due loans | ||
Nonaccrual | 13 | 18 |
Total Loans Greater than 90 Days & Accruing | $ 8 | $ 9 |
Loans and Allowance for Loan_10
Loans and Allowance for Loan Losses - Troubled Debt and Modifications (Details) - item | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Troubled debt and modifications | |||
Number of troubled debt restructuring | 0 | 0 | |
Number of loans restructured during the last twelve months that defaulted during the period | 0 | 0 | |
Residential real estate | |||
Troubled debt and modifications | |||
Number of loans in the process of foreclosure | 0 | 0 |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Company | ||
Total Capital (to risk-weighted assets) | ||
Total Capital (to risk-weighted assets), Actual, Capital Amount | $ 453,361 | $ 393,654 |
Total Capital (to risk weighted assets), Actual, Ratio (as a percent) | 13.30% | 12.30% |
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 272,136 | $ 255,884 |
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 8.00% | 8.00% |
Tier I Capital (to risk-weighted assets) | ||
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount | $ 440,007 | $ 380,950 |
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent) | 12.90% | 11.90% |
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 204,102 | $ 191,913 |
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 6.00% | 6.00% |
Common Equity Tier I Capital 1 (to risk-weighted assets) | ||
Common Equity Tier I Capital 1, Actual, Capital Amount | $ 350,157 | $ 339,369 |
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent) | 10.30% | 10.60% |
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 153,077 | $ 143,935 |
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.50% | 4.50% |
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 440,007 | $ 380,950 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 12.00% | 10.00% |
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 146,417 | $ 152,081 |
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.00% | 4.00% |
Federal Deposit Corporation And Federal Reserve Board | Rules Effective January 1, 2015 | ||
Tier 1 Capital (to average assets) | ||
Additional deductions and other adjustments to CET1 subsequent years (as a percent) | 20.00% | |
Basel III Capital Rules related to CET1, period (in years) | 4 years | |
Federal Deposit Corporation And Federal Reserve Board | Rules Phased in beginning January 2016 | ||
Tier 1 Capital (to average assets) | ||
New capital conservation buffer requirement beginning Ratio | 0.625% | |
Basel III Capital Rules related to CET1, period (in years) | 4 years | |
Additional capital conservation buffer requirement subsequent years Ratio | 2.50% | |
Merchants Bank | ||
Total Capital (to risk-weighted assets) | ||
Total Capital (to risk-weighted assets), Actual, Capital Amount | $ 478,574 | $ 412,386 |
Total Capital (to risk weighted assets), Actual, Ratio (as a percent) | 14.60% | 13.30% |
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 262,223 | $ 248,290 |
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 8.00% | 8.00% |
Total capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 327,778 | $ 310,363 |
Total Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 10.00% | 10.00% |
Tier I Capital (to risk-weighted assets) | ||
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount | $ 465,636 | $ 399,815 |
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent) | 14.20% | 12.90% |
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 196,667 | $ 186,218 |
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 6.00% | 6.00% |
Tier I Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 262,223 | $ 248,290 |
Tier I Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 8.00% | 8.00% |
Common Equity Tier I Capital 1 (to risk-weighted assets) | ||
Common Equity Tier I Capital 1, Actual, Capital Amount | $ 465,636 | $ 399,815 |
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent) | 14.20% | 12.90% |
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 147,500 | $ 139,663 |
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.50% | 4.50% |
Common Equity Tier I Capital 1, Minimum Amount To Be Well Capitalized, Capital Amount | $ 213,056 | $ 201,736 |
Common Equity Tier I Capital 1 (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 465,636 | $ 399,815 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 13.30% | 11.00% |
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 140,344 | $ 145,723 |
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.00% | 4.00% |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 175,430 | $ 182,154 |
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 5.00% | 5.00% |
FMBI | ||
Total Capital (to risk-weighted assets) | ||
Total Capital (to risk-weighted assets), Actual, Capital Amount | $ 19,384 | $ 17,537 |
Total Capital (to risk weighted assets), Actual, Ratio (as a percent) | 15.70% | 18.60% |
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 9,876 | $ 7,559 |
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 8.00% | 8.00% |
Total capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 12,345 | $ 9,448 |
Total Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 10.00% | 10.00% |
Tier I Capital (to risk-weighted assets) | ||
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount | $ 18,966 | $ 17,404 |
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent) | 15.40% | 18.40% |
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 7,407 | $ 5,669 |
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 6.00% | 6.00% |
Tier I Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 9,876 | $ 7,559 |
Tier I Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 8.00% | 8.00% |
Common Equity Tier I Capital 1 (to risk-weighted assets) | ||
Common Equity Tier I Capital 1, Actual, Capital Amount | $ 18,966 | $ 17,404 |
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent) | 15.40% | 18.40% |
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 5,555 | $ 4,252 |
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.50% | 4.50% |
Common Equity Tier I Capital 1, Minimum Amount To Be Well Capitalized, Capital Amount | $ 8,025 | $ 6,141 |
Common Equity Tier I Capital 1 (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 18,966 | $ 17,404 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 11.90% | 10.80% |
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 6,384 | $ 6,453 |
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.00% | 4.00% |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 7,980 | $ 8,066 |
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 5.00% | 5.00% |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Net derivative gains (losses) | $ (5) | $ 219 | |
Derivative assets | |||
Derivative Financial Instruments | |||
Derivative assets, fair value | 71 | $ 70 | |
Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | 19 | 9 | |
Interest Rate Lock Commitments | |||
Derivative Financial Instruments | |||
Notional amount | 9,706 | 8,812 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Net derivative gains (losses) | 114 | ||
Interest Rate Lock Commitments | Derivative assets | |||
Derivative Financial Instruments | |||
Derivative assets, fair value | 71 | 70 | |
Interest Rate Lock Commitments | Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | 1 | ||
Forward Contracts | |||
Derivative Financial Instruments | |||
Notional amount | 15,260 | 19,640 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Net derivative gains (losses) | (5) | $ 105 | |
Forward Contracts | Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | $ 18 | $ 9 |
Disclosures about Fair Value _3
Disclosures about Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Disclosures about Fair Value of Assets and Liabilities | ||
Trading securities | $ 129,914 | $ 163,419 |
Available for sale securities | 296,669 | 331,071 |
Loans held for sale | 6,307 | 11,886 |
Mortgage servicing rights | 76,249 | 77,844 |
Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Trading securities | 129,914 | 163,419 |
Loans held for sale | 6,307 | 11,886 |
Mortgage servicing rights | 76,249 | 77,844 |
Recurring | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 71 | 70 |
Derivative liabilities | 1 | |
Recurring | Forward Contracts | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative liabilities | 18 | 9 |
Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Trading securities | 129,914 | 163,419 |
Loans held for sale | 6,307 | 11,886 |
Level 2 | Recurring | Forward Contracts | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative liabilities | 18 | 9 |
Level 3 | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 71 | 70 |
Derivative liabilities | 1 | |
Level 3 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage servicing rights | 76,249 | 77,844 |
Level 3 | Recurring | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 71 | 70 |
Derivative liabilities | 1 | |
Treasury notes | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 10,743 | 11,941 |
Treasury notes | Level 1 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 10,743 | 11,941 |
Federal agencies | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 235,200 | 236,930 |
Federal agencies | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 235,200 | 236,930 |
Federal agencies | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 235,200 | 236,930 |
Municipals | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 12,480 | 21,332 |
Municipals | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 12,480 | 21,332 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 38,246 | 60,868 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 38,246 | 60,868 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | $ 38,246 | $ 60,868 |
Disclosures about Fair Value _4
Disclosures about Fair Value of Assets and Liabilities - Reconciliation of Unobservable Inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative liabilities | Interest Rate Lock Commitments | ||
Subtractions | ||
Changes in fair value | $ 1 | $ 2 |
Balance, end of period | 1 | 2 |
Mortgage servicing rights | ||
Reconciliation of significant unobservable inputs, assets: | ||
Balance, beginning of period | 77,844 | 66,079 |
Additions | ||
Originated and purchased servicing | 1,020 | 3,452 |
Subtractions | ||
Paydown | (1,110) | (1,370) |
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model | (1,505) | (893) |
Balance, end of period | 76,249 | 67,268 |
Available-for-sale Securities | Municipals | ||
Reconciliation of significant unobservable inputs, assets: | ||
Balance, beginning of period | 6,688 | |
Subtractions | ||
Paydown | (258) | |
Balance, end of period | 6,430 | |
Derivative assets | Interest Rate Lock Commitments | ||
Reconciliation of significant unobservable inputs, assets: | ||
Balance, beginning of period | 70 | |
Subtractions | ||
Changes in fair value | 1 | 116 |
Balance, end of period | $ 71 | $ 116 |
Disclosures about Fair Value _5
Disclosures about Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Disclosures about Fair Value of Assets and Liabilities | ||
Impaired loans (collateral dependent) | $ 1,600 | $ 2,639 |
Level 3 | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Impaired loans (collateral dependent) | $ 1,600 | $ 2,639 |
Disclosures about Fair Value _6
Disclosures about Fair Value of Assets and Liabilities - Quantitative Information about Unobservable Inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Quantitative information about unobservable inputs | ||
Mortgage servicing rights | $ 76,249 | $ 77,844 |
Mortgage servicing rights | Level 3 | ||
Quantitative information about unobservable inputs | ||
Mortgage servicing rights | $ 76,249 | $ 77,844 |
Mortgage servicing rights | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Discount rate (as a percent) | 8.00% | 8.00% |
Constant prepayment rate (as a percent) | 1.00% | 1.00% |
Mortgage servicing rights | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Discount rate (as a percent) | 13.00% | 13.00% |
Constant prepayment rate (as a percent) | 30.00% | 30.00% |
Collateral-dependent impaired loans | Level 3 | ||
Quantitative information about unobservable inputs | ||
Collateral-dependent impaired loans | $ 1,600 | $ 2,639 |
Marketability discount (as a percent) | 32.00% | |
Collateral-dependent impaired loans | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Marketability discount (as a percent) | 17.00% | |
Collateral-dependent impaired loans | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Marketability discount (as a percent) | 59.00% | |
Interest Rate Lock Commitments | Level 3 | ||
Quantitative information about unobservable inputs | ||
Derivative assets | $ 71 | $ 70 |
Derivative liabilities | $ 1 | |
Interest Rate Lock Commitments | Measurement Input, Maturity | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 63.00% | 95.00% |
Loan closing rates (as a percent) | 63.00% | |
Interest Rate Lock Commitments | Measurement Input, Maturity | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 99.00% | 100.00% |
Loan closing rates (as a percent) | 99.00% |
Disclosures about Fair Value _7
Disclosures about Fair Value of Assets and Liabilities - Carrying Value and Estimated Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financial assets: | ||
Loans held for sale | $ 6,307 | $ 11,886 |
Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 313,451 | 336,524 |
Securities purchased under agreements to resell | 6,838 | 6,875 |
FHLB stock | 18,880 | 7,974 |
Loans held for sale | 875,764 | 820,569 |
Loans, net | 2,168,256 | 2,045,423 |
Interest receivable | 14,365 | 13,827 |
Financial liabilities: | ||
Deposits | 3,121,027 | 3,231,086 |
Lines of credit | 31,605 | 33,150 |
Short-term subordinated debt | 13,486 | 10,582 |
FHLB advances | 292,940 | 151,721 |
Interest payable | 4,930 | 4,132 |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 313,451 | 336,524 |
Securities purchased under agreements to resell | 6,838 | 6,875 |
FHLB stock | 18,880 | 7,974 |
Loans held for sale | 875,764 | 820,569 |
Loans, net | 2,170,521 | 2,041,772 |
Interest receivable | 14,365 | 13,827 |
Financial liabilities: | ||
Deposits | 3,120,546 | 3,230,397 |
Lines of credit | 31,605 | 33,150 |
Short-term subordinated debt | 13,486 | 10,582 |
FHLB advances | 292,823 | 151,723 |
Interest payable | 4,930 | 4,132 |
Level 1 | Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 313,451 | 336,524 |
Financial liabilities: | ||
Deposits | 2,438,323 | 2,550,632 |
Level 2 | Fair Value | ||
Financial assets: | ||
Securities purchased under agreements to resell | 6,838 | 6,875 |
FHLB stock | 18,880 | 7,974 |
Loans held for sale | 875,764 | 820,569 |
Interest receivable | 14,365 | 13,827 |
Financial liabilities: | ||
Deposits | 682,223 | 679,765 |
Lines of credit | 31,605 | 33,150 |
Short-term subordinated debt | 13,486 | 10,582 |
FHLB advances | 292,823 | 151,723 |
Interest payable | 4,930 | 4,132 |
Level 3 | Fair Value | ||
Financial assets: | ||
Loans, net | $ 2,170,521 | $ 2,041,772 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Income | ||
Net income | $ 10,570 | $ 15,061 |
Dividends on preferred stock | (833) | (833) |
Net Income Allocated to Common Shareholders | $ 9,737 | $ 14,228 |
Weighted-Average Shares | ||
Weighted average shares - Basic | 28,702,250 | 28,690,876 |
Effect of dilutive securities-restricted stock awards | 35,189 | 19,604 |
Weighted average shares - diluted | 28,737,439 | 28,710,480 |
Per Share Amount | ||
Basic earnings per share | $ 0.34 | $ 0.50 |
Diluted earnings per share | $ 0.34 | $ 0.50 |
Share-Based Payment Plans (Deta
Share-Based Payment Plans (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Non executive directors | |||
Plan disclosures | |||
Shares issued | 0 | 0 | |
Value of shares available for issuance for compensation related to annual fees | $ 10,000 | ||
2016 Plan | Restricted stock | |||
Plan disclosures | |||
Shares issued | 10,127 | 7,039 | |
2017 Plan | Restricted stock | |||
Plan disclosures | |||
Shares issued | 0 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Segment Information | |||
Total interest income | $ 39,674 | $ 29,038 | |
Total interest expense | 15,543 | 8,930 | |
Net interest income | 24,131 | 20,108 | |
Provision for loan losses | 649 | 1,406 | |
Net Interest Income After Provision for Loan Losses | 23,482 | 18,702 | |
Total noninterest income | 3,664 | 11,313 | |
Total noninterest expense | 13,035 | 10,270 | |
Income Before Income Taxes | 14,111 | 19,745 | |
Income taxes | 3,541 | 4,684 | |
Net Income | 10,570 | 15,061 | |
Total assets | 3,976,725 | 3,675,849 | $ 3,884,163 |
Other | |||
Segment Information | |||
Total interest income | 471 | 265 | |
Total interest expense | (968) | (460) | |
Net interest income | 1,439 | 725 | |
Net Interest Income After Provision for Loan Losses | 1,439 | 725 | |
Total noninterest income | (663) | (336) | |
Total noninterest expense | 2,602 | 1,983 | |
Income Before Income Taxes | (1,826) | (1,594) | |
Income taxes | (507) | (561) | |
Net Income | (1,319) | (1,033) | |
Total assets | 37,993 | 21,739 | |
Multifamily | Operating Segments | |||
Segment Information | |||
Total interest income | 331 | 163 | |
Net interest income | 331 | 163 | |
Net Interest Income After Provision for Loan Losses | 331 | 163 | |
Total noninterest income | 2,691 | 10,511 | |
Total noninterest expense | 3,977 | 3,382 | |
Income Before Income Taxes | (955) | 7,292 | |
Income taxes | (243) | 1,808 | |
Net Income | (712) | 5,484 | |
Total assets | 160,609 | 141,703 | |
Mortgage Warehousing | Operating Segments | |||
Segment Information | |||
Total interest income | 14,380 | 11,857 | |
Total interest expense | 7,529 | 3,797 | |
Net interest income | 6,851 | 8,060 | |
Provision for loan losses | 133 | 674 | |
Net Interest Income After Provision for Loan Losses | 6,718 | 7,386 | |
Total noninterest income | 753 | 486 | |
Total noninterest expense | 2,336 | 1,736 | |
Income Before Income Taxes | 5,135 | 6,136 | |
Income taxes | 1,303 | 1,506 | |
Net Income | 3,832 | 4,630 | |
Total assets | 1,554,233 | 1,603,584 | |
Banking | Operating Segments | |||
Segment Information | |||
Total interest income | 24,492 | 16,753 | |
Total interest expense | 8,982 | 5,593 | |
Net interest income | 15,510 | 11,160 | |
Provision for loan losses | 516 | 732 | |
Net Interest Income After Provision for Loan Losses | 14,994 | 10,428 | |
Total noninterest income | 883 | 652 | |
Total noninterest expense | 4,120 | 3,169 | |
Income Before Income Taxes | 11,757 | 7,911 | |
Income taxes | 2,988 | 1,931 | |
Net Income | 8,769 | 5,980 | |
Total assets | $ 2,223,890 | $ 1,908,823 |